Universal Credit rules are changing – impacting 120,000 people

Mini-budget: Charlie Stayt grills Simon Clarke on figures

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In his “mini-budget” on Friday, Mr Kwarteng announced that part-time workers will have their Universal Credit reduced if they do not take “active steps” to earn more. Currently, those working up to nine hours a week at the national minimum wage are required to meet regularly with their job centre coach and take active steps to increase their earnings. Mr Kwarteng announced this would be expanded to those working 12 hours a week from tomorrow.

He also announced that it will be further expanded to those working 15 hours a week from January 2023. 

At the moment, those working up to nine hours a week at the National Minimum Wage are in the “Intensive Work Search” regime which means they need to go to the JobCentre for weekly or fortnightly work coaching sessions and needed to be actively looking for more work. 

The Intensive Work Search regime requires those on it to undertake work-related activities for a maximum of 35 hours a week.

In the meetings with the Job Centre, claimants have to provide evidence of work searches which usually include things such as creating online job profiles, registering with employment agencies and getting references.

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Those working above the nine hours a week threshold are in the “light touch” work group where people do not have to adhere to these rules. 

If claimants do not follow the rules, then they could face sanctions. 

Sanctions can include a person having the Universal Credit they receive reduced by the Department for Work and Pensions (DWP). 

If a person is single and over the age of 25 years, sanctions can reduce the Universal Credit a person receives by £11 a day, for as long as the sanction lasts.

The Treasury stated certain groups will remain exempt from sanctions, including those who are unable to work because of long-term sickness or a disability.

The Chancellor said the move was designed to “get Britain working again”.

During his speech to parliament, Mr Kwarteng said: “These gradual changes focus on getting people back into work and maximising the hours people take on to help grow the economy and raise living standards for all.

“It’s a win-win. It boosts incomes for families and helps businesses get the domestic workers they need, all while supporting economic growth.”

The DWP can place sanctions on a claimant because to receive Universal Credit a person must first sign the claimant commitment which is an agreement that sets out the things someone has to do in order to get their Universal Credit payments. 

Universal Credit is made up of a standard allowance and any extra amounts that apply. For example, if a person has children, a disability or a health condition, they could get additional elements.

In 2022-23, the standard amount is £265.31 a month for single claimants under 25, and £334.91 a month for single claimants aged 25 or over.

Couples or joint claimants under 25 receive a standard allowance of £416.45 and for those over 25 years, it’s £525.72.

Those who claim Universal Credit but still work can be eligible for the “work allowance” which is the amount a person can earn before it affects their Universal Credit payment.

There is no limit to how many hours a person can work, but their payments will stop completely if they earn over a certain amount.

In 2022-23, the monthly work allowance is set at £344 if a person’s Universal Credit includes housing support, and at £573 if it doesn’t.

In November last year, the former Chancellor Rishi Sunak cut the Universal Credit taper rate and work allowance from 63p to 55p.

This means that for every £1 a person works over their work allowance, if they have one, Universal Credit will reduce by 55 pence rather than 63 pence.

 

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