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Newsletters: October 2019

October 2019 Newsletter

Welcome to our latest newsletter - bringing you right up to date with useful benefit information. 

In this issue find out more about:

  • UC: New max deduction level - what it means for claimants and landlords.
     
  • UC & JSA Sanction periods - maximum sanction period cut.
     
  • Mixed Age Couples - Ageing into a MAC whilst on ESA?
     
  • UC Advance Payments - changes to prevent fraud.
     
  • Transitional SDP Payment - Did you know?
     
  • EEA: Recent case law - Self-employed and having a baby.
     
  • UC Child Element - where a dependent young person turns 19. 
     
  • APA Managed Payment Pilot - What's happening? 
     
  • Warm Home Discount - scheme opens...
     
  • Your chance to WIN £50 for your local FOOD BANK and chocolates for you!
Change to the deduction levels from UC....
 

Changes to deductions from UC 

As announced in the 2018 Budget, the maximum overall percentage rate for deductions that can be taken from a Universal Credit payment has been changed in order to: ‘ensure that those on Universal Credit are supported to repay debts in a more sustainable and manageable way.’

The DWP guidance was updated on 16 October 2019 and now says that the maximum amount that can be deducted for certain debts is an amount equivalent to 30% of the claimant’s Universal Credit standard allowance. The previous limit was 40%.

We understand that the DWP are reviewing deduction levels for all UC claimants when their claim is assessed on or after 16th October 2019 and some claimants have already seen a reduction in the deductions being taken.

What we have not seen however, is a change to the Regulations – which still says the limit is 40%!
So, unless the Regulations are also changed, the DWP would still have the legal power to take 40% of someone’s standard allowance to recover debts. 

How will the change affect claimants?

The change is intended as a positive one for claimants – leaving them with more UC in payment. 
However, this change doesn’t come without any implications…

What if, when the DWP review a claimant’s deductions, they find that the level of deductions is at 40% and so reduce the level to 30% - this means that one or more creditors will be notified that they will no longer receive a Third Party Deduction from the claimant’s UC award.

Most creditors will then contact the claimant directly to make an arrangement to re-pay the debt, and may persuade the claimant to agree to a repayment rate higher than the one previously in place.

And where the debt was a HB overpayment then the Local Authority may request recovery from the landlord instead, and so the claimant’s rent arrears could increase.

How will the change affect landlords?

For an existing Third Party Deduction – a landlord may find that the Third Party Deduction payment they are currently receiving for a UC claimant is reduced or even stops!

For new applications for Third Party Deductions – a landlord may find that the Third Party Deduction payment is less than it would have been before this change or even that no Third Party Deduction is allowed as it would breach the 30% max limit if other deductions of a higher priority are being deducted.

HB overpayments – where a Local Authority has been receiving payments in respect of the recovery of a HB overpayment via deductions from a claimant’s UC and these stop because of the reduced maximum deduction rate, the LA may approach the landlord to repay any outstanding debt – and they may have no option but to repay.

Examples:
Gail is getting Universal Credit as a jobseeker. She owes her landlord over £800 in rent arrears and so the landlord applies for a Third Party Deduction for rent arrears. Gail requested an Advance Payment when she made her claim for UC – this is being recovered over 12 months at a rate of £66.74 a month – this is the equivalent of 21% of her standard allowance – the DWP are therefore unable to make a 10% reduction for rent arrears and as the Regulations state that this is the minimum that can be taken, there will be no scope for a 10% rent arrears deduction until the Advance is repaid. The DWP have no option but to refuse the landlord’s request.

Lubna is getting Universal Credit. She has been found unfit for work. She fell behind with her rent and her landlord has been receiving both APA Managed Payments and Third Party Deductions at 20% of her standard allowance. She also has deductions of 5% for Council Tax arrears and a HB overpayment at 15%.
When the DWP review her deductions when her UC is next assessed, the Third Party Deduction for rent arrears will reduce to 10%, this is because the deductions for her Council Tax arrears and HB Overpayment are higher in the priority list and so the maximum 30% has been reached. 

Reduced Advances?

Another knock-on effect could be that Advances for some new claimants will be lower as a result of this change - as the new guidance not only reduces the maximum that can be reduced for Third Party Deductions to 30% but also for repayment of Advances too.
 
The maximum amount of a new claim / benefit transfer advance is generally set at the amount which the claimant / joint claimants are expected to be entitled to for their first monthly assessment period. However, this is subject to the claimant’s ability to repay – the ‘repayment cap’. Advances are repaid over a maximum of 12 months – and 12 monthly repayments at 30% of the standard allowance instead of 40% could mean some families are restricted to borrowing less than their expected award.

For example:
A couple, one of whom has a limited capability for work related activities, with 3 children age 14, 10 & 7, eligible housing costs of £520 per month and who have no income except for Child Benefit, would have an expected entitlement to UC of £2095.51. Would they be able to borrow this amount as an advance?
With the maximum deductions reduced to 30% of the claimant’s standard allowance – in this case 30% of £498.89 - the maximum they can borrow is 12 x £149.67 – ie £1796.
Whereas, previously, the limit of 12 months @ 40% of the couple standard allowance (12 x £199.56) would have enabled them to borrow the amount of their expected award.
And because the Advance will be taken at the maximum 30% allowed, no other deductions of a lower priority – including Third Party deductions for rent arrears – will be allowed.

Can the 30% limit ever be exceeded?

Yes – the 30% limit can be extended where:

A sanction deduction is in place – an amount equivalent to around 100% of a claimant’s standard allowance could be taken (or 50% where one of a couple has been sanctioned)! 

Also, where a claimant is paying back an Advance Payment where the agreement to repay was taken out before 16th October 2019 the deduction for the Advance may stay as it is which could be above 30%.

NOTE: If a sanction deduction is in place, most other deductions will be suspended. The only other deductions that can be made from a Universal Credit award which has already been reduced by a sanction - which means the 30% limit is exceeded - are deductions in respect of housing costs (rent and service charges included in the rent), on-going water and on-going fuel costs where the DWP considers it to be in the claimant's best interests – sometimes referred to as the ‘last resort deductions’

CLICK HERE: For more info on Deductions from UC
Maximum period for high level sanctions cut
from 3 years 
to 6 months
Currently the longest UC / JSA sanction period is 3 years. Obviously this causes hardship to those affected.

New Regulations, in force from 27th November 2019, will change this longest sanction period - which is applied where a claimant 'commits' a third or subsequent high level 'offence' from 1095 days (3 years) to 182 days (6 months). The changes apply to both Universal Credit and Jobseeker’s Allowance.

Importantly, this change also affects those who already have a 3 year sanction when the new Regulations come in.

Anyone who has already had their UC (or JSA) reduced for 6 months or more on 27th November 2019 should find that their sanction deductions will end on 26th November 2019*. 

If, on the 27th November 2019 a claimant has not yet served 6 months of a 3 year sanction – their deductions will come to an end once they have had their benefit reduced for 6 months*.
(*Unless there is another UC sanction period waiting to start for another sanctionable failure!). 

 
CLICK HERE: For more info on this change

Mixed age couples
ESA to UC
The changes for mixed age couples - couples where one is working age and the other is pension age - which were introduced back in May 2019 have thrown up a lot of issues and queries and have certainly kept us on our toes!

The changes prevent 'unprotected' mixed age couples from being able to make a new claim for Pension Credit or Housing Benefit under the pension age HB Regulations.

There are many different issues to consider - depending on the situation you are dealing with.

We have had several queries about.... 
Working age couples who have been claiming Income Related ESA - what happens when the older member turns pension age and they become a mixed age couple?

The answer depends on which of them is the main claimant of ESA...

If the younger member is the main claimant the IR-ESA can continue in payment - with the addition of a pensioner premium.

If the older member is the main claimant the IR-ESA will end - but the couple could maximise their UC income by claiming UC early!
Read the article in full here
Missed our Briefings on Mixed Age Couples? Click here

If you do one E-Learning course this year - make sure it's this one ….

You could save a couple
over £140 a week!


Click here

UC Advance Payments Scam
Update

 
In previous newsletters we have highlighted the issue of fraudsters abusing the availability of the online application process for UC advance payments.

What’s changed?
In September the DWP updated its procedures – claimants now have to have their identity checked at a Jobcentre before they can receive a Universal Credit advance.
This measure should help to safeguard potential victims, although for genuine claimants, it will mean they need to visit a Jobcentre before they can get their advance.   

What is the latest on this situation?
On 16 October 2019, the Permanent Secretary at the DWP, Peter Schofield, told the Work and Pensions Select Committee that around 85,000 cases have, so far, been referred to the DWP’s special team for investigation.

Can victims be moved back onto legacy benefits?
Only in limited circumstances.

Do victims have to repay the advance?
Only the part they received themselves - but this does mean that they must be able to provide evidence of this to the DWP.

Anything else changing to prevent this fraud?
In the future only 'Elements' that have been verified by the DWP will be included when working out the claimant's maximum Advance.

 
Read the article in full here

Transitional SDP Payments
Update

 
Did you know:

Since 24th July 2019, the DWP have been making payments to those people who moved onto UC 'naturally' and as a result lost out because they would otherwise have been entitled to the Severe Disability Premium in an award of IR-ESA, IB-JSA or IS.

As at 29th August 2019, 6,315 UC claimants had received a payment - being given an average lump sum of £2,160 as well as on-going monthly payments.

This lump sum is disregarded as income/capital for 12 months or the length of the UC claim - whichever is longer.

The on-going monthly payment is paid on top of the claimant's UC award and will continue to be made unless the UC claim is terminated, the claimant changes relationship status or until the payment gets converted to a 'transitional element' ie regardless of whether the claimant's PIP ends, or a carer starts getting paid Carers Allowance for them.

IMPORTANT:

These payments are not just for those claimants who moved onto UC before 16th January 2019 - some claimants who moved onto UC on or after 16th January 2019, ie when the SDP Gateway Condition was introduced, can get a Transitional SDP Payment.
CLICK HERE: For more info

EEA Nationals
- recent caselaw

 
The Court of Justice of the European Union (CJEU) has recently ruled that an EEA national who ceases self-employed activity in the late stage of pregnancy retains self-employed status as long as she starts to work again 'within a reasonable period' after the birth of her child.
Employed workers have had this right for several years following the CJEU decision in the Saint Prix case.

The Judge in HMRC v Henrika Dakneviciute (C‑544/18) (19 September 2019), stated:

'Article 49 TFEU must be interpreted as meaning that a woman who ceases self-employed activity in circumstances where there are physical constraints in the late stages of pregnancy and the aftermath of childbirth retains the status of being self-employed, provided that she returns to the same or another self-employed activity or employment within a reasonable period after the birth of her child.'

This means that there is now no difference in the treatment of self-employed and working EEA nationals in terms of the right to reside rules.

 
CLICK HERE: For our more information on EEA Workers

Recent Query about...the Child Element

QUESTION:
I wonder if you could answer a query for me regarding a dependent student who is 19 years old.

A couple have had the child element of their UC stopped because their daughter, who is a full-time student in non-advanced education, turned 19 in April 2019.

The daughter was advised she would have to apply for UC in her own right, but when she did she was advised she is not entitled because she is a student.

I have tried to check this and from what I can understand they will only get the child element up to 1st September following their 19th birthday and it is not up to their 20th birthday like Child Benefit and Child Tax Credit.

Would you confirm if this is correct and if so is there anything the couple can claim to support their daughter who is still classed as dependent because they are still in receipt of Child Benefit.

ANSWER:

Unfortunately this is correct. The Child Element would end. The rules are different in UC to what they are with Child Tax Credit. Click here for more details.

And unless the student is disabled or another exemption applies, or they could convince their Work Coach that the course would be compatible with any work related requirements, they wouldn't be eligible to claim UC in their own right - click here for details.

If she was awarded UC in her own right then the parents would lose the Child Benefit.


APA managed payments
The DWP are trialing a new process for paying social landlords APA managed payments - ie an alternative to the once every 4-week schedules.

The trial involves two social landlords.

It is at 'proof of concept' stage and there are no timescales yet regarding any full implementation.

We will of course update the Housing Systems website as any further information comes through on this....watch this space!

 
CLICK HERE: For more info on Alternative Payment Arrangements

UC:Get the facts

booklet?



See it in its full glory

Click here
 



 

Warm Home Discount Scheme 

The Warm Home Discount scheme (£140 discount on energy bills) for 2019/20 is now open.

Those on Guarantee Pension Credit will receive a letter by mid December saying whether they must contact the Warm Home Discount Team (by end Feb 2020) or if their energy supplier will discount their bills automatically.

Others on a low income could be eligible if their supplier is part of the scheme and they fit the criteria.

CLICK HERE: for more info

  Need Universal Credit training specifically for housing workers?

Let us design a course just for you...

Click here for more information

Sound interesting? Get a date booked in!
email: training@housingsystems.co.uk
In-house course for just £965+vat
(no hidden extras)!
CLICK HERE for our training brochure


Your chance to
win £50 for your local food bank

 
Every month we give you the chance to win £50 for your local food bank
The winner will be selected at random and can nominate a food bank of their choice to receive a £50 cheque from us, and will receive a box of chocolates for themselves.


Well done to the September winner -   John Wiles from Ocean Housing - a £50 cheque is making its way to his chosen food bank.
To enter this month's competition, just email the answer to the question below to us by Friday 22nd November 2019 for your chance to win.


This month's quiz .....

Penny was getting Income Related ESA (which included a Severe Disability Premium) and Housing Benefit.

In January, Penny lost her award of the daily living component of Personal Independence Payment when she had her review medical assessment. She challenged the decision.
Penny's ESA reduced - she lost her Severe Disability Premium (due to losing her PIP daily living component).

Then in July, Penny moved to a different local authority area. She had to claim UC because at the time she 'passed' the SDP gateway.  Her Income Related ESA ended due to her UC claim.
Penny has just won her PIP appeal and her daily living component has been reinstated back to when it had stopped in January.


Questions
1. What can Penny ask the ESA dept for?
2. Then, what can Penny ask the UC dept for?


Find the answer on the website here.

email your answer to: info@housingsystems.co.uk

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