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?

@DogsAreShit

Yes I'm fairly certain we can rest easy knowing that the bulk of those lovely benefits are going towards paying off the friend's landlord's mortgage rather than her own.

This!

Some of the attitudes on here are appalling not to mention short sites.

There are so many possible factors when it comes to this situation! My own for example, ex cheated, repeatedly, and was emotionally abusive - MN consensus on this would be to get out, I did. Said abusive ex, dragged me through the court systems for the best part of 3 years, the end result of this???? 50/50 contact. One week on, one week off. So now I need to find a job that is during school hours (all kids go to different schools as well to add insult to injury, school runs are fun) or an evening job (meaning I literally never see my children) and put the kids in childcare, or a job that is one week on/one week off (good luck with that) I personally feel I have been put into an impossible position, I have nothing to offer the working world, I will be on a minimum wage job, I have no prospects or worthwhile qualifications, I could work every evening and only “gain” £30 on top of UC, which will potentially get lost in travel expenses/childcare expenses/more trips to court when my ex asks what the hell is the point in my kids even being here???? £30 a week to NEVER see your kids???? Is it worth it? Does anybody truly believe that this is a choice I’m making????? I’d love to hear another solution

@dontdisturbmenow YY not to mention the lack of pension entitlements that they would have accrued.

[quote PADH]@UhtredRagnarson

Children in their pre school year get 15 hours free nursery in NI.

15 hours as opposed to 30 is a massive difference in the area I live where nursery fees are astronomical and all local childminders are full. I have done every sum and combination possible. With all the will in the world, it doesn't balance.[/quote]
I was just correcting your claim that children don’t get free hours in NI. They do. Whether those are enough on an individual basis is a different question.

She may well be better off working more hours. But she might have health conditions or DC's with SEN that make it hard.
I stick to 3 days a week as I've had health problems and my youngest is unbearably challenging. As long as I can get her to Uni safely in a few years then I'll work more hours.

Yes, sorry I'm forever being told on here about my 30 free hours. I was just clarifying that we don't get them here - I believe you also get them a year earlier depending on when their birthday falls compared to here.

@UhtredRagnarson
except if you have childcare & you pay for longer hours than you work or fort transport

The reality of being employed and picking up extra hours isn't just as simple as money when you're a single parent. Most minimum wage jobs are shift work to some degree, and zero hours contracts.
They often want you at short notice, which is great when you have to give a weeks notice for childcare, the job I lost during the pandemic would issue a rota on a Friday night/Saturday morning due to start Monday. Different shifts every week, arranging childcare for a shift to get sent home after an hour because 'the needs of the business' - losing money. Refusal to give set hours, punishments by not getting any hours for a few weeks if you can't work a shift at short notice. All perfectly legal on zero hours contracts.
When those things are sorted out so people can actually work full time hours, and a 'living' wage is actually enough to live on happens (calling it a living wage doesn't make it so, especially when the gov still top it up!) And absent parents are made to cough up their share rather than allowed to hide money, or themselves and no one gives a shit, I'll then have an issue with people working pt and claiming when they're capable of more.

I think because some people have to work set hours a week in order to get UC and this is usually haven't as 15/16 hours a week (e.g. if you have pre-settlement under the EUSS). Also to earn an extra £300 from £600 to £900 and only have your income go up from £1406 to £1517 probably dpes not reflect the extra costs in transport and childcare, explaining why someone would not want to work beyond x hours if they cannot cover the corresponding increases. My nursery charges £53 a day for a session from 8am to 18:00, meaning the additional income from an extra day a week is not covered by the increase in income. If you have a two year old in nursery on free hours because of low income then earning that additional £1200 a year may push you over the threshold and you lose that benefit.

I think this is certainly why people make the decisions they do. I have learnt a lot managing part time workers and their motivations to do so as they know they will never be a high earner and have more disposable income working less and lower childcare costs. I think the system is flawed, but I don't profess I know how to fix it.

Oh I totally agree with you. It’s shit. And the very definition of a trap. Which is why people refer to the benefit trap.

It's much worse than a loss of 63p in the £. You are taxed on that pound as well! It's a massive disincentive to work more hours.

There is no point. The alternative is you might as well bung most of your money in your pension, because you're barely worse off in net terms.

When I worked in retail I was forced to cover overtime for people that refused to work over 16 hours because it would affect their UC. I could kind of see their point of view because it could take months to reverse any issues after going over hours.

But there shouldn't be a system where someone can turn down more hours just so they can claim more benefits.

Working 16 hours on minimum wage lifts the benefit cap.

You're right. I used to work 9 hours a week (no benefits) and met lots of ladies who were SP and said they were offered more hours but couldn't accept them as it would mess up their U. C for the next months claim. I think it's 67p deducted for every pound earned over the threshold plus it affects your rent benefit.
So your u. C could be alot less next month and you're fucked. Struggle to buy food, transport to work, bills. Frightening.
I don't blame them.
Personal responsibility is great, losing your home, being hungry is not great.
Crazy system where you're scared to work more!

With uc you don't have to keeo informing them re wages changing they puck it up automatically
The system isn't as bad as people make out and if you work you are better off as uc will top up , its way better than tax credits as much less risk of overpayment
We recently claimed it , I was surprised with dh wage that we qualified, we don't gt a lot by whilst I am looking for work it certainly helps with out food bill.
When I did some temp work it was easy and they just adjusted what I got which was mostly nothing but that was fair enough as those months I had earnt money.
I actually don't think its a bad system

Working less hours is a rational choice. You are effectively being paid far less than minimum wage for those hours, unless you decide to bung it in your pension.

Don't get me started on tapering UC once you have savings over 6k too - again, a massive reason not to save, and try and escape because for every pound you save over that amount, you'll start losing income.

It's a trap - and it's by design.

I calculate an allowance for certain folk, and the clever/sly ones claim U. C and register self employed. They say they work 16 hours a week, declare net profit of £1 and also claim childcare fees.
I always question why you're earning £1 a year but your kids need childcare for 16 hrs week.
They got bitten on the bum with s. E grant though.

Tax credits was a far better system. No problems with two pay packets in an assessment period - it was all done on annual income.

It's easy to avoid overpayment - all you need to know is what income your entitlement was based on, and your gross income for the year. Any gross income on top of that - into the pension it goes.

And no savings limit.

We never seem to solve this issue in the UK. Iain DS tried very hard with UC but still failed. It may be slightly better than under the previous system but not much. Same with employment when you earn a lot - the state takes so much people end up working less.

If we could move to a flat tax system and perhaps with a university payment to everyone over 18 whether in work or not that might work better.

Unfortunately that's the way it is. I was on UC, got an admin job working full-time and was worse off.

I was receiving £1250 in UC plus £150pm in DHP and then got a job and earned just under £1300 per month in the job but lost the DHP, lost the 80% reduction in council tax, had to pay for commute costs that I didn't have before etc.

So ended up much worse off but did really enjoy the job!

I really wish people wouldn't post on benefits threads when they actually aren't sure of how it works. So much misinformation here!

I haven't yet read through it but have already seen lots of people just quoting headlines and 'well I've heard...'. So much utter tosh!

@Xenia

We never seem to solve this issue in the UK. Iain DS tried very hard with UC but still failed. It may be slightly better than under the previous system but not much. Same with employment when you earn a lot - the state takes so much people end up working less.

If we could move to a flat tax system and perhaps with a university payment to everyone over 18 whether in work or not that might work better.

Agreed. The effective marginal tax rates all over the income spectrum are absolutely bonkers.

The Worst is 50-60k - you can have an EMTR of over 100% with the loss of child benefit and your family circs qualify you for tax credits (easy with disabled children)!!

But also 100-125k is pretty awful with the loss of the personal allowance.

Thank heavens as I bang on about it for salary sacrifice.

I'm sure it's been said but while in the short term you're better off especially when considering childcare costs, working to keep your income and home life balance can definitely come at a cost.

As it doesn't feel worth to work more if your benefits drop proportionately but then you have many years of no career progression. I'm in a similar situation in that since having my DC I have taken part time work to fit around them but I'm lucky I got into a professional role with room for progression before this. I'm also young and have young DC but I'm already looking at making that jump to full time better paid work even if it means materially I won't be much better off and will have to work longer hours for it. Because if I didn't I could be stuck in the position I'm in and before I know it the kids will be grown and I'll have fewer options for progression as people younger and more qualified and experienced come along and get those jobs. Plus then you'll stop being entitled to those benefits as the vast majority of my benefits are due to the DC.

It's a precarious position in society to be in; you are also at the mercy of the system so if there are cuts you can't just look for another benefit system the way you can look for a job, and multiple times I have had my benefits stopped for completely arbitrary reasons which really screws you over.

I don't regret my decisions at all as it means I've got to be around lots for the DC but I think you have to be very proactive, keeping in work and seeking qualifications to eventually get above the threshold.

@TulisaIsBrill agree that putting into a pension once you reach the tipping point is the best choice because of the disregard. Ofc they don't tell you that and a lot of people don't know about it. Like I said it takes long term planning to get out of and ofc all of that relies on a long term upward trajectory work/wages wise which means, for LPs and low paid LPs in particular, being lucky.

@donewithitalltodayandxmas yes, the considerations are very different in a two adult household.

The problem with keeping your hours at 16 hours is you don't build a career and then what do you do once the benefits stop when the kids leave school?

You're also very likely to be living in rented accommodation for the rest of your life as you're living month to month.

[quote beentheretoo]@wewillmeetagain that’s awful I truly didn’t realise so your actually better off working 2 days a week than working FT for 25K, how is that any incentive to go retrain and work more hours?

What’s the point in working full time then? You might as when just work 2 days and have the rest of the time to yourself (I’m feeling like that just now as my mental health could really benefit from it).

I don’t think UC should be less but at the other end wages should be higher then so that if you do work more hours it’s worth your while.[/quote]
Many years ago I posted about the benefit gap, between last benefit payment and first wage packet. It stopped so many people I worked with from getting a job because they had no money to fill that gap, no credit, no creditors etc. We used to suggest they started a credit union account and then they could borrow what they needed to fill that gap. Of course they would have missed a few jobs by then!

Now the same thing happens with UC. Women in particular have to weigh up the point at which they just cannot afford to take on more paid work. It is still the same old benefit trap!

Successive governments know this. But the remedy is hard, will be vote loser. In reality it's simple, keep on paying full UC for a few months after someone gets a job! Give them one bloody good chance of getting their finances sorted and they won't need to leave work, work less etc. That won't fly, politically. You can hear the objections already (many of which will be quite sane and sensible too!).

But nobody will even look at a properly flexible scheme to help anyone get back into work, let alone women with child care issues.