Landlords Association for Northern Ireland Universal Credit 15 May 2013

Universal Credit Introduction

Welfare Reform Bill - to date The Welfare Reform Act in GB received Royal Assent on The NI Welfare Reform Bill was introduced to the Assembly on An Ad-Hoc committee set up to look at Welfare Reform Bill and conformity with equality issues

Welfare Reform Bill - to date The Social Development Committee resumed its scrutiny of the Welfare Reform Bill on 30 January, completed its scrutiny and reported on 19 February Consideration Stage was scheduled for 14 April but has been delayed by Minister

Universal Credit: The Vision 1. Making work pay 2. Supporting progression in work 3. Simplification 4. Reduce fraud and error 5. Improve levels of benefit uptake 6. Protecting the most vulnerable

What’s in / What’s out for Universal Credit Child Benefit, Carer’s Allowance (will remain) Contributory JSA and ESA will remain Help with rates will be the responsibility of DFP initially administered by NIHE? IN Income related ESA Income based JSA Income Support Child Tax Credits Working Tax Credits Housing Benefit SF (Budgeting loan elements) OUT XDLA / PIP XContributory Benefits XChild Benefit XCarers Allowance XSF Crisis Loans & CCGs X Housing Benefit (Rates)

Digital First Claimants must submit an electronic claim or make a claim by telephone The effective date of claim is the date the claim is submitted on the condition that the claimant commitment is signed Some claimants will need to attend an interview to sign the claimant commitment so the claim cannot be accepted until this happens There will be no provision in the regulations for Clerical Claim Form

Eligibility for Universal Credit

Universal Credit - key conditions Lower Age Limit Upper Age Limit Not Receiving Education Residency Claimant Commitment Have a National Insurance Number Jointly have capital of less than £16,000

Claiming and Paying Universal Credit

Key Stages in the Universal Credit assessment process STAGE 0 – IDENTIFY THE BENEFIT UNIT then STAGE 1 – CALCULATE THE UC MAXIMUM AMOUNT STAGE 2 – CALCULATE THE ADJUSTED UC AWARD STAGE 3 – CALCULATE UC ENTITLEMENT STAGE 4 – CALCULATE THE UC PAYMENT then

Stage 1 - Benefit Unit - ‘Maximum Amount’ Childcare Element 70% of costs up to a cap Carer Element Set rate Housing Element (include relevant NDs) (Rent): Size criteria, age, lower of rent/LHA (Owner): SMI subject to a cap LCW Lim. Capability for Work Element : lower rate Lim. Capability for WRA Element (support group): higher rate or Carer Child Element/Disabled Child Additions Higher set rate for 1st child, lower set rate for 2 nd + extra set amount if (a)disabled (b)severely disabled Standard Allowance ( 4 set rates dependent on 1 or 2 adults and 25 years old) plus, where appropriate … Adults Children The sum total of all the relevant elements = The UC Maximum Amount Housing Childcare

Stage 2a - Adjusted Award Any earnings (via Rti )/earnings equivalents taking account of work allowance & 65% taper where appropriate Applicable income minus UC MAXIMUM AMOUNT Reduce the Maximum Amount to take account of Tariff Income, Other Income & Earnings to give the Adjusted Award Applicable capital minus And then......

Stage 2b – Adjusted Award ADJUSTED AWARD (2A) minus Any reductions necessary to take account of the Benefit Cap plus Any increase necessary (where Cap does not apply) to take account of Transitional Protection equals UC ADJUSTED AWARD....further revise the Maximum Amount take a/c of the other 2 key adjusting criteria = The UC Adjusted Award

Stage 3 –Universal Credit Entitlement UC ADJUSTED AWARD Any conditionality sanctions Wherever appropriate reduce the Benefit Unit’s UC Adjusted Award further to take account of sanctions The UC Entitlement NB In most cases the UC adjusted amount will = UC entitlement equals UC ENTITLEMENT (subject to a de minimis amount) hardship payment (if awarded) minus plus

Stage 4 – Actual Universal Credit Payment UC ENTITLEMENT minus To work out the actual UC Payment Amount the necessary deductions are taken from the Benefit Unit’s UC Entitlement Recovery of O/payment, UC Advances/Budgeting Advances or Hardship Loans Child Maintenance Payments Fraud Sanctions Third Party Deductions The actual UC Payment (paid monthly or more often ) equals

Calculating the Universal Credit Maximum Amount

Elements of Universal Credit Standard Allowance Child Element/Disabled Child Element Childcare Element Limited Capability for Work Elements Carer Element Housing Element (Rent and Mortgages)

Standard Allowance There will be 4 values of Standard Allowance: Type of claimantAmount per assessment period (Monthly) Single claimant aged under 25£ Single claimant aged 25 or over£ Joint claimants both aged under 25£ Joint claimants where either is aged 25 or over £489.06

Housing Element The Housing Element will provide an amount to meet the cost of either rent or mortgage interest The Housing Element may be less than the amount due to the landlord (under occupancy, non dependants, Local Housing Allowance) Support for mortgage interest (SMI) with the current waiting period (13wks) and capital limit of (£200,000) to remain unchanged to 31/03/2015 The zero earnings rule will apply to SMI under UC If they stop work 13 week waiting period need to served again

Housing Element In GB the Housing Element (Rent) will be paid directly to the claimant In NI Minister has decided direct payment of the Housing Element (Rent) to landlords is the default position Mortgage payments will continue to be paid to lender Work is ongoing to decide how to calculate the amount that will be paid to the landlord Non dependants- Flat rate of £65.00 per month applied. Under the current system it varies according to their income. If a claimant is in prison (< 6 months) they will be entitled to the Housing Element only to ensure they don’t lose their home.

Benefit Cap The Benefit Cap will be introduced on a date to be agreed Pre-Universal Credit - the cap will be applied to new and existing customers through Housing Benefit payments The cap will apply to the combined total of “welfare benefits” to which members of a benefit unit are entitled to either jointly or individually. There is no right of appeal. The cap will not affect any payments of Universal Credit made to help a benefit unit pay for childcare Household that are considered to be “in-work” will be exempt from the cap.

Examples of a Universal Credit Assessment

Universal Credit Assessment Monthly Assessment Standard Allowance £ Child Element £ Housing Element £ Maximum UC £ Less Tariff Income £0.00 Less earnings after work allowance & taper applied £0.00 Adjusted UC payable £ Rent paid direct to £453.40* landlord Actual UC payable to claimant £ Example A: lone parent over 25 years 2 children, 1 boy 5 years & a girl aged 16yrs Not working Living in a 4 bedroom property in Belfast (Private Rented Sector ) Rent: £540 per month (Local Housing Allowance Rate Applies) Capital: Nil (entitlement is reduced if capital is over £6,000) Housing Element As a private rented tenant the amount of the Housing Element is restricted to the Local Housing Allowance Rate of £ per week for a 3 bedroom property in Belfast. £ x 52 ÷ 12 = £453.40).The shortfall of £86.60 is due to be paid to the landlord. * Example shows full housing element paid to landlord. This may not apply if UC award is reduced due to other income.

Universal Credit Assessment Monthly Assessment Standard Allowance £ Housing Element £ Maximum UC £ Less earnings after work allowance & taper applied £ Adjusted UC Payable £ Rent paid direct to £182.65* landlord Actual UC Payable to £ claimant Example B: single person under 35 yrs Working - Net earnings: £ per month. Work Allowance £1,330 PA (£ per month). No children Living in a 1 bedroom rented property in Belfast Rent: £300 per month (shared room rate will apply) Capital: less than £6,000 (Entitlement is reduced if capital is over £6,000) Earnings Calculation £ less £ work allowance = £ £ x 65% = £ Housing Element In this case the customer is under 35 years and entitled to the shared room rate only (a single room in a shared property). He is entitled to the Local Housing Allowance Rate which will vary depending on the Broad Rental Market Area (BRMA). In Belfast this is currently £42.15 per week.(£42.15 x 52 ÷12 = £ this is the amount allowed per month). The shortfall i.e.£ is due to be paid to the landlord by the claimant. * Example shows full housing element paid to landlord. This may not apply if UC award is reduced due to other income.

Universal Credit Assessment Example C Lone Parent over 25 years old (Widowed) - child. Receiving Widowed Parent Allowance £ per week and pension £ per month from late husband’s employers. Living in Private Rented 2 bedroom property in Belfast £ per month Tariff Income is £4.35 per month for each £250.00, or part of £ over £6, £10,000 - £6, = £4, £4,000 ÷ 250 = x £4.35 = £69.60 Housing Element As a private rented tenant the Housing Element Is restricted to the Local Housing Allowance rate of £93.27 per week for a 2 bedroom property in Belfast. £93.27 x 52 ÷12 = £ The housing element will meet the full rent.As the claimant has other income only £24.73 is available to be paid to the landlord. Monthly Assessment Standard Allowance £ Child Element £ Housing Element £ Maximum UC £ Less Tariff Income £69.60 Less Widowed Mothers £ Allowance Less Occupational Pension £ Less earnings after work allowance & taper applied £0.00 Adjusted UC payable £24.73 Rent paid direct to £24.73* landlord Actual UC payable to claimant £0.00 * Example shows full housing element paid to landlord. This may not apply if UC award is reduced due to other income.

Universal Credit Other Considerations

Change of Circumstances Whole month approach will be applied to Universal Credit this will result in winners and losers If a baby is born mid assessment period the claimant will receive the child element for the whole month If a claimant has housing costs and they reduce mid month the lower housing cost will be paid for the whole month

Northern Ireland Differences Default position is payment of housing element to landlord Split payments between two parties in the household subject to certain eligibility criteria Payment of Universal Credit twice a month The criteria for the flexibilities has still to be decided

ANY QUESTIONS