Department of Work and Pensions: Changing universal credit rule could dramatically improve cash flow for thousands of people

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A change that comes to Universal Credit on Monday could change the lives of thousands, the DWP confirmed. Earlier this year, four single moms won a case in the Court of Appeals, where judges said up to 85,000 UC claimants could be affected by the change.

The court ruled that the Secretary of State for Work and Pensions acted “irrationally and illegally” in causing universal credit regulations to ignore the fact that the dates on which monthly wages are paid may vary due to weekends and holidays.

The three judges ruled on June 22 of this year before the Court of Appeal that “the failure of the Secretary of State to ensure that the regulations take into account the phenomenon of the” non-bank daily wage gap “is illegal. “.

The effect of this could be significant for thousands of people claiming to be UC, the Birmingham Mail reported.



A universal credit application form

The DWP has been ordered to fix the issue, and as of November 16, claimants paid twice a month by their employer will not be penalized in the next payment.

Usually, workers who are paid twice would have been flagged as “over-earning” in the system – and therefore their next benefit would be reduced, sometimes even to zero.

Often times, this “double pay” occurs because someone’s employer pays them on the first or last working day of the month, or because they have received a late / early payment due to a public holiday.

Now, the new rules mean that anyone who receives two salary payments in a month will no longer have universal credit unfairly reduced.

The perks system will now only record one payment for each month-long evaluation period for CU, to make sure people can’t lose.



The Department of Work and Pensions

It’s especially timely with Christmas around the corner – kicking off three public holidays, Christmas Day, December 28 instead of Boxing Day and New Years.

This means that anyone whose wages arrive earlier or later means that they will have two paydays in the month, but will not suddenly be penalized with their universal credit.

Welfare Benefit Minister Will Quince said, “Universal Credit is a flexible benefit, and we continue to make changes and improvements to make sure people have the best possible experience.

“This change will give people stability if they are paid two paychecks in a single review period, ensuring that their Universal Credit payments remain consistent. “

The government had tried to block the change when it came to the Court of Appeal after single mother Danielle Johnson, along with three other moms, won a High Court legal challenge against the government’s interpretation of Rule 54 of the Welfare Reform Act 2012, which meant that some months she would receive much less universal credit than others.

Danielle, who is a waitress at school, is paid on the last working day of each month. But in some months, due to a weekend at the end of a month, his salary is deposited into his bank account a day or two earlier.

The Universal Credit computer system interpreted this to mean that Danielle had earned twice as much in one month and none in the others, so her benefit payment would be recalculated accordingly.

This variation in benefits would cause Danielle serious cash flow problems.

Between them, the four mothers fell into rent arrears, failed to pay council tax, incurred bank overdraft fees, borrowed money, and even became dependent on food banks to reach out. two ends.



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One of the moms had to turn down a promotion and put her career aspirations on hold because of how the UC system handled her earnings.

Another felt compelled to give up her job to look for another job where there was no conflict between her pay date and the UC assessment period.

The judges of the Court of Appeal did not accept the DWP’s argument that “the swings in universal credit payments are a central feature of the system.”

Lady Justice Rose said: “The swings here are not a response to a change in the work habits or family circumstances of the respondents. The oscillation is a response only to whether the last day of the month falls on a non-bank day or not.

“I cannot accept that the program cannot be modified to ensure that the computer can recognize that the end date of the assessment period of a particular applicant coincides with the date of payment of his salary, so that if the latter date falls on a non-bank day, receipt of two approximately equal payments will likely result from a payment of salary one day earlier and the second payment should be carried over to the next evaluation period. ”

Following the judgment, the Birmingham Mail reported that Danielle Johnson said: “I receive a regular monthly salary and the support I receive from Universal Credit should reflect that.

“I am relieved that the judgment means that the government must now act to ensure that I and others affected do not lose any more money and have a steady cash flow.

“I find it unbelievable that the government has fought this matter in court for so many years, it should not have taken the appeals court to tell them something that is just common sense. “

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