UC impact assessment

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    Julian Hobson

    http://www.dwp.gov.uk/docs/universal-credit-wr2011-ia.pdf this is a link to the latest impact assessment.

    Trying to get my head around what has changed. This assessment has been done because the previous one forgot that CT support was to be “localised”.

    Interesting footnotes on page 23, particularly “For this reason, compared to the previous Impact Assessment, there is a fall in the number of people who have a lower MDR under Universal Credit than under the current system”.

    Is there anyone out there with a better undserstanding than I of whether the footnotes accurately describe the effect of removing CTB when doing the impact assessment?

    Paragraph 11 on page 8 rings alarm bells but should it ?

    I find it increasingly difficult to get my head around all of this.

    Julian Hobson

    What does this mean on page 29 ?

    Council Tax Support
    It was announced at the Spending Review that support for council tax will be localised and will not form an element of the Universal Credit. Council Tax Benefit will be abolished and local authorities will develop their own local discount schemes, determining the amount of support the most vulnerable need to meet their council tax bills.
    To reflect the decision that council tax support will remain outside Universal Credit, the Government has decided to make some changes to the parameters set out in the White Paper and accompanying Impact Assessment. This will support some of the positive impacts of Universal Credit on poverty, income redistribution and work incentives, while not increasing the cost of the reform.
    . Specifically, this Impact Assessment sets out higher earnings disregards than were set out in the White Paper. This would allow a reduction in the risk of dual tapering (council tax support and UC being withdrawn simultaneously) ensuring that support can be directed to those who could otherwise be affected by the exclusion of council tax support from UC.
    . To achieve this, additions to the original earnings disregards have been proposed32 including:
    An additional earnings disregard to couples with children of £250;
    . Increasing the child element in the earnings disregard from £2,700 to £4,000, and;
    i. An increase in the disregard floor per adult of £700, including for single claimants.


    May be misreading it but I take this to mean that if someone starts work or starts earning more then they will lose their Ctax support based on whatever that is worked out on but that UC will compensate for that due to having higher earning disregards so that they don’t get hit twice?


    That’s my reading of it, Nick.If this is what they have in mind then it suggests to me that there will be no backtracking and CT will stay outside UC, as originally proposed.

    Julian Hobson

    Clear as Mud !

    Lee Fearon

    Agree with Nick, higher earnings disregards for CT charge payers to counteract any work disincentives containrd in the CTB repacemment schemes. But how these will be achieved ” while not affecting the cost of the reform” is particularly bemusing.

    Also Julian, “Paragraph 11 on page 8 rings alarm bells but should it?” Well in my view, yes. As the report says the distributional assessment, (how much benefit families will get under UC) is based on 90% entitlement to CTB replacement. However, the net effect of both the 10% reduction in central funding and the requirement to protect the entitlement of pensioners, means that in order for the replacement scheme to run to budget, the ceiling for non pensioners will need to be below 90%.

    Julian Hobson

    I’d love to see some worked examples of all the various options.

    When calculating UC (including Household costs) the earnings disregard will be increased to incentivise work.

    When calculating CT relief you will do it net of housing costs element (presumably)because that isn’t real income (complex I think so).

    and then this in the impact assessment:

    Claimants in receipt of large amounts of housing support will have a higher award of Universal Credit than those with low or no housing costs. In order to address this and target resources fairly, we intend to allow those claimants who receive little or no support with their housing costs to keep more of their earnings. We intend to do this by setting higher earnings disregards in these circumstances.

    So what is it ? Who is actually getting the increased disregards ? Those with or without housing costs and or those with or without CT liabilities ? Presumably the new Ct disregard will only apply to those with a Ct liability ? How will they know?

    Julian Hobson

    Another implication will be:

    Those that rent and get higher UC due to housing costs will have less generous income disregards than those with lower or no housing costs (owners).

    If you can get in work UC and local CT relief (who knows) we will look at net income (net of housing costs) and so potentially will award more CT relief to those with lower net income (those with the lower earnings disregard, in other words renters).

    Even muddier or am I just making this up ?????


    I normally having a weekly tete-a-tete with Iain Duncan Smith and I would ask him Julian but since the Dr Fox thingy all blew up he’s not returning my calls:- he reckons we need to put some space between ourselves for a while. I was really looking forward to my trip to Dubai as well.

    John Boxall

    Has anybody got a spare brain to help me understand these things?


    Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery. The blossom is blighted, the leaf is withered, the god of day goes down upon the dreary scene, and—and in short you are for ever floored.

    Wilkins Micawber, Ch12 David Copperfield

    Rob Hawes1

    I could name all sorts of people who don’t use theirs!


    We were given a hint of this by Lord F a couple of months back.

    That’s simplification for you! :p

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