Universal Credit: government proposals to take account of past earnings
in repeat claims consultation
Community Housing Cymru Group response
1.
About Us
The Community Housing Cymru Group (CHC Group) is the representative body for
housing associations and community mutuals in Wales, which are all not-for profit
organisations. Our members provide over 155,000 homes and related housing services
across Wales. In 2012/13, our members directly employed 8,000 people and spent over
£1bn in the Welsh economy. Our members work closely with local government, third sector
organisations and the Welsh Government to provide a range of services in communities
across Wales.
Our objectives are to:

Be the leading voice of the social housing sector.

Promote the social housing sector in Wales.

Promote the relief of financial hardship through the sector's provision of low cost
social housing.

Provide services, education, training, information, advice and support to members.

Encourage and facilitate the provision, construction, improvement and
management of low cost social housing by housing associations in Wales.
Our vision is to be:

A dynamic, action-based advocate for the not-for-profit housing sector.
Community Housing Cymru Group Members:
AelodauGrŵpCartrefiCymunedol Cymru:

A ‘member centred’ support provider, adding value to our members’ activities by
delivering the services and advice that they need in order to provide social housing,
regeneration and care services.

A knowledge-based social enterprise.
In 2010, CHC formed a group structure with Care & Repair Cymru and CREW Regeneration
Wales in order to jointly champion not-for-profit housing, care and regeneration.
General Points
CHC is in favour of the general aims and principles of the Real Time Information (RTI)
system and a move away from the current Tax Credit system of annual reconciliation which
led to an unmanageable level of claw backs and a disincentive for those in low paid, flexible
work. Anecdotal evidence from our advice service Your Benefits are Changing, suggests
that some Working Tax Credit claimants, who work on a flexible basis and thus experience
fluctuations in their income, leave work due to unexpected claw backs. However, we are of
the view that claimants will require a
considerable amount of preparation in order to
effectively manage their claims and some claimants may not be able to manage their claims
themselves at all.
Welsh housing associations undertake huge amounts of preventative and preparation work
via their own anti-poverty programmes and initiatives to try to prevent debt and reliance upon
unscrupulous lenders by working in partnership with local authorities, credit unions,
Moneyline Cymru and advice agencies.
The Your Benefits are Changing campaign and information service was setup to prepare
people (cross tenure) for Universal Credit and other welfare reforms.
YBAC addresses welfare reform within wider context of higher levels of poverty in Wales
Community Housing Cymru Group Members:
AelodauGrŵpCartrefiCymunedol Cymru:

200,000 children in Wales live in poverty. 1

In-work poverty - 23% of the people who contact the YBAC helpline are in work,
claiming benefits.

Welsh average earnings dropped by 12.5%, April 2008-November 2013.2
We use change as opportunities to engage with people and get to the root problem:
This year our Budget Bus and advisers attended 14 community days held across Wales and
3 public events - Pride Cymru, Pontypool Carnival and Cardiff Hayes to tell people about
Universal Credit. Since the beginning of July we have:

Started 839 new advice cases

Distributed over 7,000 pieces of literature

Spoken in detail to 2,190 people about changes that affect them directly

Explained the impact Universal Credit would have on the 44% of households who had
never heard of it.
We are also working in partnership with the Wales Illegal Money Lending Unit because we
know many Universal Credit claimants will become more vulnerable to loan sharks. We
launched the Don’t Get Bitten television campaign, in partnership with WIMLU and recently
won a national award.
Our Impact Study shows that 44% benefit claimants in Wales are unaware of changes.
However, this is lower than the national average 85% and evidence that YBAC is working.
1
Save the Children
2
GMB, Dec 2013
Community Housing Cymru Group Members:
AelodauGrŵpCartrefiCymunedol Cymru:
Response
Is this likely to act as a disincentive for people offered a short-term contract (note that
there is a monthly £100 de minimis rule)?
This proposal will affect the poorest sector of society who are more vulnerable to the peaks
and troughs of temporary employment.
The new approach to past earnings is a significant disincentive to work in areas of rural
poverty where summer holiday jobs are the only employment opportunities for many people
in places such as Pembrokeshire or other tourist areas in Wales.
Certain rural employment is seasonal and again this acts as a disincentive for many to work
in the seasonal rural economy which will in turn encourage greater reliance on temporary
migrant labour from abroad.
In Gwynedd, for example, many people earn a living by fishing, agricultural work, and tourism
and there are months of the year where there is simply no work available for them.
Feedback from our members also suggests that many young people accommodated in
supported housing schemes take up short-term contract work and could possibly view the
new approach to past earnings as a disincentive but take up the work anyway as they could
face sanctions. Once the short-term contract finishes they could find themselves in financial
difficulties whilst surplus income is applied. This could also have an impact on rent arrears
and their ability to sustain a tenancy.
These are relatively low paid occupations where, in theory, UC should make their lives much
easier. However, the surplus earnings rule might make this type of work unviable as what
they might earn, for example, by working in a hotel for 2 weeks over Christmas and the New
Community Housing Cymru Group Members:
AelodauGrŵpCartrefiCymunedol Cymru:
Year would not increase their overall family income. It would therefore not incentivise them
to work.
This could potentially increase the reasons to avoid registering economic activity and drive
more activities into the black economy.
The policy may apply as a result of changes in circumstances, and not necessarily
because of a fluctuation in earnings. What circumstances can you envisage where the
surplus earnings rule might create hardship, and how might this be mitigated?
Processes to mitigate hardship in a wide range of circumstances must be developed.
We are concerned that where there has been a change in circumstance such as disability or
additional caring responsibility, the surplus earnings rule might create hardship and we
suggest that thresholds for this type of change be put in place to give households the
opportunity to manage sudden changes.
Budgeting advances can only be given upon entitlement and will not assist where there is no
entitlement to Universal Credit. The Discretionary Assistance Fund in Wales is an option but
the criteria for allowing this would need to be stipulated in such situations.
Given that new claims advances will not be available until entitlement begins, what are
the likely impacts upon local authorities and the charitable and voluntary sectors?
UC will be rolled out to all Jobcentres by 2015. YBAC recently organised a visit to Shotton
JobCentre Plus and found that to date, a handful of social housing tenants have made a
claim but that all experienced serious financial problems including:

All had arrears of over £1,000, some from previously in-credit accounts.
Community Housing Cymru Group Members:
AelodauGrŵpCartrefiCymunedol Cymru:

Claims processes were taking up to 13 weeks, support was difficult to access and
JCP, Local Authority and UC department were uncoordinated.

One tenant survived on food parcels as they were not made aware of advances3
The unavailability of advances before entitlement begins is likely to place severe pressure on
discretionary and non-statutory services such as food banks and Discretionary Assistance
Fund.
There could be an increase for advice and assistance on benefit and debt issues and also for
advice in relation to trying to work out what their surplus income was. The estimate of
entitlement when claiming Universal Credit should also consider the surplus income if
possible to make claimants aware of this. It also could lead to more claims for managed
payments to the landlord being made.
What factors should decision-makers be advised to consider when exercising their
discretion to consider how the claimant’s individual circumstances will erode the
surplus earnings?
In some individual circumstances, discretion in decision making on surplus earnings may be
required.
For example, change of circumstances in cases of disability, new caring
responsibilities, particularly where costs have been incurred on an annual basis, for example,
MOT / car maintenance, insurance etc.
What particular problems might be faced by couples forming or separating and which
are not currently addressed in the proposals?
In cases of relationship breakdown, particularly in cases of domestic violence, decision
makers should consider that a partner or spouse may never have received monies earned by
3
First Choice Homes Oldham FCHO found 91% were not informed or informed to late about advances
Community Housing Cymru Group Members:
AelodauGrŵpCartrefiCymunedol Cymru:
the ex-partner and decide that for this reason, their past earnings will not be taken into
account for future calculations.
What are the key things that will need to be communicated to claimants for the policy
to operate effectively?
The key message with all aspects of Universal Credit must be around good budgeting skills.
However, one of the main messages to claimants about the new approach taken to past
earnings must be around good budgeting and swift action on any potential fluctuations in
income on a month by month basis. Budgeting will be even more important for those who
may be responsible for making their housing payment for the first time.
In order to stay in control of monthly finances, a good level of digital capability is necessary.
Digital inclusion among the most vulnerable is one of our biggest concerns. We know that:

Claimants often lose benefits due to misunderstandings. 2000-2011 there were a total
of 217,000 sanctions4 and this is increasing5

47% of social housing tenants do not use the internet6
Community Housing Cymru Group
4
Wales on the Edge
5
https://www.gov.uk/government/statistics/jobseekers-allowance-and-employment-and-support-allowancesanctions-decisions-made-to-march-2014
6
http://chcymru.org.uk/uploads/events_attachments/CHC_digital_inclusion_access_report.pdf
Community Housing Cymru Group Members:
AelodauGrŵpCartrefiCymunedol Cymru: