Early Warning System E-Bulletin - November 2020 | CPAG

Early Warning System E-Bulletin - November 2020

Date: 
17 November 2020

UNIVERSAL CREDIT: more claimants, more evidence of flaws

November 2020 edition of CPAG's Early Warning System e-bulletin for England & Wales

CPAG collates case studies in our Early Warning System to demonstrate the impact of changes in the social security system on the wellbeing of children, their families and the communities and services that support them.

In this edition of the e-bulletin, we look at the top three topics that have been recorded in the Early Warning System (EWS) throughout October 2020. Although issues that relate to the COVID-19 pandemic and the government measures taken in response to it still feature in the Early Warning System, we are now seeing a resurgence of long-standing concerns about the universal credit system:

  1. Habitual Residence Test failures
  2. Universal credit child element expiring
  3. Universal credit assessment periods clashing with pay cycles

This month, we are also calling for evidence concerning:

  • Furlough and SEISS extensions: have you seen much take-up? Or more redundancies/ dissolution of businesses?
  • Test and Trace Support Payment scheme: are parents of children who have been told to self-isolate receiving the payment?
  • Benefit cap: are people who had a grace period applied in March anticipating a drop in entitlement in December?

Tell us what’s happening in your cases by completing an online form or emailing the Early Warning System.

1. Habitual Residence Test failures

The EWS has received a high number of case studies concerning the habitual residence test every month for the past two years, and October 2020 has been no exception. In our April 2020 e-bulletin, we noted that families who have no income and cannot claim universal credit due to the habitual residence test become destitute immediately – which is particularly harsh at a time when they cannot obtain work and do not have the option of returning to their country of origin.

What are EWS cases telling us?

Case study: Hungarian couple came to UK 3 months ago. He worked as picker for 5 weeks before stopping due to injury. She continues to work 3 days per week with an agency. UC refused.

EWS cases highlight poor decision making by the DWP much more often than they concern gaps in provision. For example, it is often unclear whether the DWP has considered:

  • Another right to reside may apply to a claimant with pre-settled status
  • Part-time work or fluctuating hours may be “genuine and effective” and confer worker status
  • Claimants may rely on the status of a family member
  • Claimants may have retained worker status

What can we do about negative HRT decisions?

In light of the ongoing prevalence of this problem in the EWS, CPAG has raised this issue with the DWP. Their informal response stated that only 2% of HRT interviews resulted in ‘blocked’ UC claims. At first glance, this does not correlate with what we’re seeing in the EWS and we await more detailed statistics.

EWS cases indicate that many EEA nationals may in fact have sufficient right to reside to claim UC, despite a negative DWP decision. To check whether someone has a right to reside, you can use our "Do you have a right to reside?" tool on AskCPAG or see “Who has a right to reside” in CPAG’s Welfare Benefits and Tax Credits Handbook (Part 11: Immigration and residence rules for benefits and tax credits > Chapter 68: Coming from abroad: residence rules > 5. Who has a right to reside available here on AskCPAG). EEA nationals can challenge the DWP’s decision that they do not satisfy the habitual residence test by submitting a mandatory reconsideration request. However, they may need to open a new UC claim in order to submit the request online, as they cannot submit a journal entry in a ‘closed’ claim.

According to EWS cases, negative HRT decisions can now be avoided by obtaining settled status under the EU Settlement Scheme (which you can read about on the EU settlement scheme page of the gov.uk website). However, the same is not true for people who have pre-settled status under the same scheme. CPAG is pursuing a legal challenge to this difference in treatment, which you can read about on the EU Pre-Settled Status test case page of the CPAG website. In the meantime, EEA nationals with pre-settled status should check whether they have another right to reside (see resources linked above for checking who has a right to reside) or consider submitting a mandatory reconsideration request. You can use our "Refusal to award UC to EU national with pre-settled status - Mandatory Reconsideration" tool on AskCPAG.

It is worth advisers noting that CPAG’s success in the KH v Bury means that worker status may be retained beyond six months without providing evidence (compelling or otherwise) of a genuine chance of being engaged in employment. You can read about the case on the KH v Bury MBC and SSWP (HB) (2020) UKUT 20 (AAC) page of the CPAG website.

Tell us what’s happening in your cases by completing an online form or emailing the Early Warning System.

Developments to look out for

The EU settlement scheme is now open for applications beyond Brexit on 31 December 2020, up to 30 June 2021. The Citizens’ Rights (Application Deadline and Temporary Protection) (EU Exit) Regulations 2020 (SI.No.1209/2020) provide that between 31 December 2020 and 30 June 2021, EU citizens without settled status can continue to rely on the current right to reside rules, and the Citizens’ Rights (Application Deadline and Temporary Protection) (EU Exit) Regulations 2020 (SI.No.1209/2020) provide similar protections for EU citizens with pre-settled status.

CPAG is monitoring any changes in the quality of the DWP’s habitual residence test decisions in the run-up to and in the transition period for Brexit. Tell us what’s happening in your cases by completing an online form or emailing the Early Warning System.

2. Universal credit child element expiring

In October 2020, the EWS received a high number of cases concerning the removal of the child element of universal credit on the 1st September following the child’s 19th birthday despite the child remaining in full-time non-advanced education, and continuing to count as a “qualifying young person” for Child Benefit. In the same situation, Child Tax Credit claimants can continue to receive an element for their 19 year old child until they leave non-advanced education or reach their 20th birthday (whichever comes soonest).

Case study: A mum of a 19 year old who is in college had the child element (£281.25 pm) removed from her UC. She still gets Child Benefit for her son and he cannot claim UC in his own right.

For many universal credit claimants, the only way to mitigate the loss of the child element (worth up to £281.25 per month) is to oblige the 19 year old to leave education and make their own universal credit claim, which would clearly prejudice the young person’s long-term employment prospects.

What can we do about the loss of child element for 19 year olds in relevant education?

CPAG is pursuing an appeal to challenge the more restrictive definition of a “qualifying young person” in universal credit which you can read about on the “Universal credit for 19 year olds in full-time, non-advanced education” page of the CPAG website. It is worth noting that even if CPAG’s case is successful in the First-tier Tribunal, this will not be a binding precedent for other cases, and it will only be in circumstances where there is a subsequent Upper Tribunal decision in favour of the claimant, that other claimants could clearly rely on the decision in their own appeals. Nonetheless, a First-Tier Tribunal success could be persuasive in other appeals.

A claimant in a similar position could make a request for a mandatory reconsideration of the decision. It is likely that the DWP will uphold the original decision, at which stage the claimant could appeal to the First-tier Tribunal on similar grounds as the case linked above. Advisers assisting with appeals can get in touch with CPAG at testcases@cpag.org.uk

Developments to look out for

We are gathering evidence with a view to campaigning on this issue so do let us know if you’ve come across similar cases by completing an online form or emailing the Early Warning System. CPAG would also be interested to hear from education or student bodies who are concerned about young people at risk of ending their studies prematurely as a result of the loss of the child element.

It is likely that similar cases will arise in increasing numbers as more people claim UC, and their children reach 19 years old. Claimants are often unaware that they will lose the child element in the assessment period which contains the 1st September after their child’s 19th birthday, so advisers may wish to warn them, where appropriate.

3. Universal credit assessment periods clashing with pay cycles

Since the publication of our Rough Justice report in August 2018, the EWS has received increasing numbers of cases concerning the problems arising for working universal credit claimants who receive wages more than once in an assessment period. This October, we saw more cases than ever, as record numbers of people turn to universal credit when their earnings dropped as a result of the pandemic.

What are EWS cases telling us?

EWS cases are telling us that people are losing out because the UC system does not apportion earnings across assessment periods, but counts income strictly in the assessment period that it is (reported as) received. We are hearing that employed UC claimants lose out in a number of scenarios:

  • Loss of work allowance due to shifted pay date (e.g. around non-banking day) and no earnings received in a subsequent assessment period
  • Benefit capped due to shifted pay date and lower/no earnings received in a subsequent assessment period
  • Benefit capped despite working 16 hours per week due to non-monthly pay cycle
  • Not financially worse off overall but unable to budget due to variations in award, despite stable pay cycle

Case study: A single parent is struggling to pay their rent because they received two 4-weekly pay packets in one AP. Their UC is £240 lower than in APs when only one pay packet is counted.

What can we do about clashes between assessment periods and pay cycles?

CPAG has had some success in legal challenges where it is clear that claimants are financially worse off overall.

New regulations have been introduced as a result of our success in SSWP v Johnson, Woods, Barrett & Stewart [2020] EWCA Civ788, which you can read about on the “Universal credit, earned income and monthly pay” test case page of the CPAG website. For people who are paid regularly on a monthly basis, the DWP will have the power to reallocate one of two wage payments received in the same assessment period to a different assessment period. However, it is already apparent that the automated UC system will not be able to reliably identify all affected claimants. Claimants must therefore be ready to promptly report on their journal when they spot two monthly wage payments being counted in one assessment period, and be ready to produce wage slips and bank statements to enable a swift correction – hopefully before the UC payment date.

The DWP is applying to appeal our success in the R (Pantellerisco and others) v SSWP [2020] EWHC 1944 (Admin) case, which you can read about on the “Universal credit, benefit cap and those paid 4 weekly” test case page of the CPAG website. The High Court ruled that it was irrational for a person who works 16 hours per week to be benefit capped in 11 out of 12 assessment periods because she is paid 4-weekly, when she would escape the cap if she were paid at the same rate monthly. Claimants in this situation are advised to use the template to request mandatory reconsideration available on web page linked above.

In cases where claimants are financially worse off overall, but their situations do not match the scenarios above, it is still worth submitting a mandatory reconsideration request. Advisers can check how the Johnson and Pantellerisco judgments may be applied using our “How might this decision be applied to others?” table available on the web pages linked above. For assistance drafting an MR request or appeal submission, advisers can get in touch with CPAG at testcases@cpag.org.uk.

In cases where claimants are not financially worse off overall but are struggling to budget with fluctuating UC awards, a challenge is currently less likely to be successful. Please tell CPAG about these cases by completing an online form or emailing the Early Warning System. Advisers may also wish to assist their clients to raise complaints with the DWP, which can be done online on the “Make a complaint” page of the gov.uk website and/or contact your client’s local MP to press for change.

Developments to look out for

We are likely to see an increase in the number of cases concerning assessment periods clashing with payment cycles following the Christmas period, when many workers are paid early.

We also anticipate that people who work extra hours over the Christmas period will find themselves worse off. UC claimants may not realise how much their UC entitlement will be tapered by the extra pay. Or they may find that their benefit cap grace period ends before 9 months have expired from its start – the grace period ends when claimants earn enough in one assessment period to escape the cap and ‘unused’ months cannot be accessed in subsequent assessment periods even if earnings return to their previous level.

CPAG is monitoring all of the issues outlined above. You can tell CPAG what is happening in your cases by completing an online form or emailing the Early Warning System.


Do you have something to tell us?

Hearing about your cases has a profound impact on our work. If you have a case which shows how changes in social security affect you or your clients, please let us know.

Topics we are looking out for:

  1. Furlough and SEISS extensions – have you seen much take-up? Or more redundancies/ businesses folding?
  2. Test and Trace Support Payment Scheme – are parents of children who have been told to self-isolate receiving the payment?
  3. Benefit cap – are people who had a grace period applied in March anticipating a drop in entitlement in December?

Submit a case or email the Early Warning System​ to tell us what you're seeing and how we can help.


Do you need CPAG's advice?

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Advice by email

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AskCPAG

Free access pages on coronavirus and benefits

Tools for identifying relevant support or drafting mandatory reconsideration requests