This post takes a closer look at how the introduction of Universal Credit impinges on people who might have had to end their career before formal retirement age through ill-health, as all the talk from IDS and his minions about how UC will 'make work pay' has conveniently avoided looking too hard at the consequences of bringing in this benefit for people who aren't working, especially those towards the end of their working lives.
If you are 'medically retired', when your Statutory Sick Pay runs out you often qualify for contribution-based Employment and Support Allowance, the benefit which replaced Incapacity Benefit from 2008. It's a 'non means-tested' benefit, so is unaffected by savings or a partner's earnings but, if you have a private pension, contributory ESA is reduced by 50% of the value over £85 per week.
Until the Coalition came to power, it was paid for as long as you were ill enough to qualify for it. In 2011, the present Government shifted the already tight medical goalposts closer together, making it more difficult to score the 15 points needed to have 'Limited Capability for Work' and be eligible for ESA. Then they time-limited contributory ESA for claimants not allocated to the most severely incapacitated 'Support Group' to one year, even if your condition had no chance of improvement and you had no real prospect of working again, saving the hard-working tax-payer around £101 per week per affected claimant - who would themselves have been a hard-working tax-payer had misfortune not intervened, since entitlement contributory ESA relies on an adequate record of NI contributions.
Then we come to Universal Credit. Here's an example of how that impacts someone who has taken 'early retirement':
Ahmed gets an occupational pension of £65 per week, and is also entitled to contribution-based ESA of £101.15* per week, a total of £166.15. Ahmed has to pay £70 per week rent so makes a claim for Housing Benefit. This is calculated by comparing his actual income with what he would get on income-based ESA. Ahmed’s income is £65 per week higher than this. Housing Benefit rules say he should pay at least 65% of that ‘excess income’ (£42.25) towards his rent, but he should get the other £27.75 as Housing Benefit.
If Ahmed has to claim Universal Credit instead his
housing costs are included in the amount the Government say he needs
to live on - £742.86* per month, including his
housing costs. His income from ESA and pension is £719.99 per month. Unlike Housing Benefit, the 65% ‘taper’ only applies to ‘earned
income’ - any other income is counted in full. Ahmed might argue that he
had ‘earned’ his contribution-based benefit and work pension, but the UC
regulations do not see it that way; both are treated as ‘unearned
income’ and taken into account in full. Ahmed would get the equivalent
of just £5.28 per week Universal Credit, £22.47 per week less help with his rent than he
would get claiming Housing Benefit.
Once again, someone who does not conform to any of the 'scrounger' stereotypes we are shown in the media takes a substantial cut in income due to 'Welfare Reform' and, unless you are that person, you probably know nothing about it.
. Once again, someone who does not conform to any of the 'scrounger' stereotypes we are shown in the media takes a substantial cut in income due to 'Welfare Reform' and, unless you are that person, you probably know nothing about it.
*2014/15 figures
