8/23/2015 Work & welfare – challenging interactions Katie Lane

CAB service enquiries Citizens Advice Bureaux, 390 independent registered charities 3,400 locations 21,500 volunteers and 7,000 paid staff 7.2 million new problems last year 2.4m debt issues 2.1m benefits and tax credit issues Helping people understand and claim what they are entitled to, Helping to resolve administrative problems; and to challenge decisions.

Work & Welfare - challenging interactions Moving from out of work benefits to in-work tax credits & wages – transition & delivery issues Varying hours rules for benefit & tax credit entitlement Childcare Universal Credit – major reform – the answer?

Changing work position Gaps in income JSA stops, wages in arrears & delay in WTC payments Administration problems In & out of work project (JCP/LA/HMRC) Lone parent research – barriers to work

Changing work position: case study Mr & Mrs Smee lost their jobs in 2010 & claimed JSA as a couple. Mrs Smee found some agency work & called JCP to sign off. They asked her where she’d like WTC paid if entitled, but she didn’t realise they’d submitted a claim on their behalf. The job only lasted 4 days & she had to make a rapid reclaim for JSA. When they went to sign on they were told that there was a problem with payment which stemmed from their WTC claim. They called HMRC to end the claim, but despite numerous calls & contradictory information - a month later JSA was still not in payment. The Smee’s were struggling financially, extremely distressed & following earlier problems experienced with benefits since losing their jobs, they’d lost faith in the system. They were also finding it almost impossible to travel to job interviews.

Benefits & tax credits & hours rules Working a few hours Earnings disregards - £5/£20 Hours rules for out of work benefits Working 16/24 hours Hours rules for working tax credit entitlement 16/24/30 hours Complexity, debt & arrears as changing working hours result in claimants falling in and out of entitlement

Benefits & tax credits & hours rules Case 1: Jane is self-employed but her work had reduced in the last year due to general economic downturn. This not only resulted in reduced earnings but meant she lost her WTC as her hours had dropped below 30. Case 2: Sam had a 9 year old child and had been working 16 hours a week. Her employer cut her hours to 8 a week which both reduced her earnings & ended her entitlement to WTC. She fell into arrears with her payments to both priority & non-priority creditors - & used up the final £5 credit on her mobile when calling HMRC to report her changes. Case 3: Joan has poor health, needs a special diet & constant antibiotics. She works for a care agency but her hours vary due to her health & because she can only work when her clients are infection free. She is also paid at three different rates. Her son lives with her & also works varying hours. Though he doesn’t contribute to household cost her HB is reduced depending on his earnings. The variations in both of their earnings have resulted in overpayments of HB of over £900 & council tax arrears of £430 & she has received a bailiffs letter.

Childcare issues Financial support for childcare mirrors tax credit rules Childcare providers less flexible Pay per session rather than per hour One month notice Up front deposits Availability in evenings/weekends

Childcare issues: cases Case 1: Zoe had worked full-time (30 hrs) on a zero hours contract for 4 years. She sought advice when her employer said he was reducing their hours to irregular 6, 12 or 16. What were her employment rights & how would her tax credits be affected? She was likely to lose entitlment to help with childcare costs & would have to pay for more than she used as the nursery could not change her usage week to week. The nursery also required four weeks notice of any change. Case 2: Pam was a lone parent working 16 hours which included evenings & weekends. Her family had been helping with childcare but this was no longer possible. She was neither able to change her hours or find affordable childcare for these times.

The future: Universal credit Will it smooth the interactions between welfare and work?

Universal credit: Positives One Universal Credit to replace all means-tested benefits for households of working age No more working tax credit; child tax credit; housing benefit; income support; JSA & ESA etc Families & individuals with disabilities can work a few hours without losing any benefits Only one benefit withdrawal rate so families will always gain from working an extra hour of work – after tax & NI 24 pence in every £1

Universal credit: potential problems Childcare – not yet decided how help will be provided Getting it wrong will mean work won’t pay at certain hours proposals so far don’t look good Free school meals – unless generous entitlement rules; risk of cliff edges Council tax benefit – support decided locally & less for working age