Too simple: the failure of universal credit assessment periods
In the ‘simple’ world of universal credit, monthly assessment periods are the supposedly ‘neat’ way of judging what financial support families should get based on their earnings and circumstances. For example, if someone starts earning more their universal credit is reduced. But in a new report we published this week, using data from our early warning system, we show how assessment periods are an oversimplification, creating chaos for claimants trapped by their inflexibility.
Here’s the process: when you’re on universal credit, the government looks at your circumstances (including any income, childcare costs and your living arrangements) within a set monthly assessment period. The start of the assessment period is based on the date of your universal credit claim. Your circumstances at the end of that set period each month will determine your universal credit payment.
This creates problems in two main ways.
One relates to your work: if your payday/s do not fall neatly within your assessment periods, the system might think you’re earning more than you are and reduce your universal credit and associated support, or less than you are and apply the benefit cap (which sets a limit on what you can receive in benefits if you are deemed not to have done enough paid work). For those who benefit from a work allowance within universal credit (an amount you can earn before your universal credit starts to be reduced), if you don’t receive a paycheque within one of your assessment periods you will be financially worse off by £125 or £258 every time this happens.
For example, you might be paid early before Christmas and so have two paydays within the assessment period before Christmas – one at the beginning of the period – say 26 November - and one near the end – say 21 December. Or you might be paid every four weeks, and not quite earn enough in those four weeks to escape the benefit cap even though you do earn enough if your pay is averaged out over the month.
Two relates to your housing and other circumstances: because your living circumstances on the last day of the assessment period are what count, you might lose out on support for things like housing costs. Where you are living on the last day will determine what you’ll get in housing support. If your rent is lower on the last day of the month (for example because you’ve moved house) you’ll only get help for the lower amount. This could mean losing hundreds of pounds and can even lead to rent arrears if you don’t have enough money to pay the last bit of your more expensive rent.
These problems can be fixed, and we have proposed several possible solutions. To solve the first, we’re calling for more flexibility in how earnings are assessed, such as using an average of earnings; claimants to be allowed to change their assessment period dates; and, vitally, more information and support for claimants. To solve the second problem, the government needs to pay housing costs based on the actual rent charged, and allow for pro rata payments to account for changing circumstances within an assessment period. We’ve looked in detail at how these arrangements could work in the full report.
Rather than stability and predictability, the current system of assessment periods in universal credit is creating uncertainty and worry for some claimants and some are losing hundreds of pounds a year purely because of when their paydays fall or when they move house. Families need to know what universal credit amount they’ll get in order to plan and budget, which is so crucial when money is tight. And the support they get should be based on a fair assessment of their needs – rather than changing in arbitrary ways.
The government says it will consider the findings in our report carefully. In trying to create a ‘simple’ system, they’ve made something that does not remotely reflect the reality of families’ lives and work. This must change.