The Governments new benefit system, Universal Credits (UC’s), has been in the news on and off for years. There have been problems and controversy but 2015 signals a milestone in the progress of UC. After several delays it will start to roll out across Jobcentres country wide, and new claimants will be asked to make a claim for this re-structured benefit instead of the old style ones they would have claimed for in the past.
The Governments new benefit system, Universal Credits (UC’s), has been in the news on and off for years. There have been problems and controversy but 2015 signals a milestone in the progress of UC. After several delays it will start to roll out across Jobcentres country wide, and new claimants will be asked to make a claim for this re-structured benefit instead of the old style ones they would have claimed for in the past.
One of the interesting aspects of UC is that it is directly linked to the information that payroll produces, and the benefits that claimants are eligible for is determined by the figures that payroll bureaus and departments upload to HMRC in the form of Real Time Information (RTI) submissions.
Before we consider this rather startling prospect it is probably a good idea for a recap on what the new benefit actually is. So let’s start at the beginning – what are Universal Credits? Well they are basically an amalgamation of some current benefits into one handy payment.
These include the following:
• Income Support
• Income-based Jobseeker’s Allowance
• Income-related Employment and Support Allowance
• Child Tax Credit
• Working Tax Credit
• Housing Benefit
There are a whole ream of existing benefits that are not included such as Pension Credit, Carer’s Allowance and Child Benefit but it still represents a huge change in the way money is claimed, and more importantly how the level of pay-outs are determined. The simple fact is that payroll information will no longer just be used to calculate pay and pensions, it will be used to calculate benefit payments as well, and on an almost real time basis.
When payroll information is sent to HMRC via RTI they will send that data on to the Department of Works and Pensions (DWP) who are in charge of UC. DWP will use that income data to adjust a UC claimants payments each month. (Employers who don’t yet use RTI will have to report manually via an online portal). Up to now it has been the responsibility of the individual claimant to tell the Government about their income, usually at the end of the year which caused under and overpayments. UC aims to solve this problem – a problem which has cost the exchequer billions of pounds in incorrectly paid benefits.
It sounds like a great solution, but of course there are potential problems. The accuracy of UC payments to a claimant it totally reliant on the accuracy of RTI submissions and that system is definitely not free from error! And since many claimants of UC are amongst the most vulnerable citizens in the country they could have a rough time if affected by incorrect RTI.
The regulations state that regardless of whether RTI figures are correct or not, they must be used. If an employer corrects any errors in the next months payroll the UC payments should also be corrected, although this could be difficult for claimants to understand since there will be no information on why these peaks and troughs are occurring from either DWP or HMRC!
Late RTI submissions could result in claimants receiving higher UC payments in one month, but much lower payments in the next. Again, there will be no explanation for this supplied.
These issues could also affect employers. On one hand DWP will no longer have to approach employers about data for certain benefits, but if claimants are adversely affected by RTI submissions they could direct frustrations at their employer once they become aware that DWP or HMRC are not ultimately responsible.
All this leads to the fact that payroll and RTI need to be timely and accurate if the new UC system is to work, something that adds extra pressure on employers, payroll bureaus and individual claimants, not to mention the Government – Universal Credit really can’t afford another setback!