Irregular income earners impacted by Universal Credit

The Department for Work and Pensions worked with parliament to make changes to the Universal Credit system. This could impact an estimated 200,000 claimants that will be already enrolled into the scheme by 2016 and cause them to face a delay in receiving benefits.

To be clear, these changes will be for families that are already receiving assistance from Universal Credit programme, and it is not part of their initial application process. It will take effect in April 2016. For those people that are on the scheme at that time, it is estimated that tens of thousands of households could actually have their benefits stopped, or receive a delay, for up to 6 months.

Why there might be a six month delay

The current process work as follows. Staff from Department for Work and Pensions calculate the amount that a claimant is entitled too monthly. The agency will review the income at their job and other savings they have. This calculation is a part of the benefit process.

Once the review has been completed, if the family enrolled has a total income that is above a certain amount in that month that is being reviewed, then the Universal Credit amount will be reduced. Or if their income is high enough, then the benefit could even be stopped in its entirety. This calculation currently takes place each month.

Now, with the support of the UK parliament, the staff at DPW will calculate any benefits to be paid after reviewing the claimant’s income for the last 6 months. So they are going back further in time as part of this process.

If their income is high in say one month, but they then earn very little money the following month, then the low income family may face a delay in future payments for up to 6 months. The reason is that the high income in say month one will impact how DWP makes the payments, and they do not know that say month 2 income will be zero. They can earn up to £300 more in one month than the next without being impacted, but that is not that much. This can even impact those who take on additional seasonal work for income.

The end result is that the person may be unable to claim universal credit for maybe as long as six months. It will not impact all people as there are other conditions. The key one being that the DWP changes will only be for people making repeated claims within 6 months of a previously made claim ending. That is why it is estimated that “only” 200,000 households will be impacted and not an even higher number.

Impact expected

It will obviously be major. Many people may not be able to pay their bills for that month, or maybe they will turn to one of the ever growing number of food banks. The National Housing Federation fears an increasing number of evictions. So the DWP changes will be major.

Maybe the best thing people can do is for claimants who may be expected, such as those that have an irregular income, they will need to plan. When their income is high in one month, the person should save a good portion of that for paying their future bills in following months. They will need to plan much more closely than maybe they did in the past as they can’t rely on the Universal Credit from one month to another.