Employed Universal Credit claimants are seeing their benefits slashed by up to £258 a month when their pay days clash with built-in “assessment periods”, new research suggests.
In-work claimants who receive payments such as Housing Benefit, Child Tax Credit and Income Support through Universal Credit are subject to a cap when their paydays fall on the last day of the month.
Universal Credit assessment periods are used to find out how much a person has earned in order to ensure benefits reflect a claimant’s earnings.
Currently, for every £1 earned by a person claiming Universal Credit, payments are reduced by 63p.
A person’s assessment period begins on the day they apply for Universal Credit and new research from the Child Poverty Action Group (CPAG) has found that, for claimants whose assessment periods and paydays fall at the end of the month, the timing can work against them.
That’s because, with bank holidays factored in, paydays which fall just one day early in a given month would see a claimant paid twice in the same assessment period.
This double payment would trigger a “cap” on benefits owed to a claimant, resulting in a reduction for some claims of up to £258, CPAG calculated.
Over the course of a year, the situation can lead to wildly varying payments. In one example, cited by the charity in a report published on Monday, a couple with two children received between £0 and £1,185 a month between December last year and April.
Varying Universal Credit payments... a diary
Universal Credit, total benefits payments for a couple with two children.
December 2017: £624
January 2018: £466
“We don’t know if we’re coming or going from month to month. It makes budgeting so, so difficult because you just do not know what you’ll get,” the couple said.
The new figures were based on the experiences of 20 claimants.
Universal Credit is designed to simulate the world of work and its monthly payments, made in arrears, have been criticised in the past for increasing debt among claimants.
Work and Pensions Secretary Esther McVey conceded last month that payment cycles for those in work needed to be reviewed.
The new figures form the latest in a long line of criticism of the policy. Last week a parliamentary committee said that Universal Credit can be manipulated by domestic abusers to entrap their partners financially.
MPs have also described the policy as “failing” its principle aim to save taxpayer’s money.
Hundreds of thousands of families are set to move onto Universal Credit over the next few years, with all benefits due to be paid through the system by 2022.
The charity’s Alison Garnham said: “Universal Credit isn’t working for working people.”
Garnham added that “claimants are often left flummoxed by how much - or how little - Universal Credit they will receive from one month to the next.
“But we believe most of the problems created by the monthly assessment system can be fixed relatively easily if the political will is there.
“The mass migration of families on to Universal Credit should not begin until these fundamental problems are resolved.”
A DWP spokesperson said: “Universal Credit adjusts automatically to people’s earnings and in months where a person is paid more their payment will decrease, but they may receive an increased amount the following month.
“We are listening to stakeholders’ concerns regarding payment cycles and we will consider this report carefully.”