Home > Conservative, Labour, Liberal Democrat, UK Politics > Life is SHIT on Benefits

Life is SHIT on Benefits

Sorry for not updating in the last few days, my PC crashed and I am deciding what one to buy next. I half fancy a net book. Also please excuse the typos. The browser on the PS3 does not have a spell check. Anyway that is a by the by.

I came upon these cases the other day that highlight the very real struggles those on benefits face. Life on benefits is certainly not the luxury that the Daily Mail wants you to believe. These are real cases.

Life as a Banker.
The woman is a pat time worker with a bank. She is certainly not one of the fat cat bankers. She does however benefit from some of what would be considered the fat cat schemes as far as her pay is concerned.Her pension is deducted from her gross pay as part of a salary sacrifice. This lowers her level of taxable income. The LA concerned did not pick that up when calculating her pay for benefits. Normal benefit calculations would start at her gross pay, deduct tax, NI and half of any pension contribution from her pay to calculate income for benefit purposes. By following that standard approach she was massively overpaid because the pension needed to be added back to the gross before it could be deducted. This overpayment goes back five years. The LA in question is writing this overpayment off. They however lose a considerable sum of money as a result.

She also get an annual bonus. Not massive, about £2k. Benefits takes this into account for the period it relates to. 85% of that money is swallowed up by the means test. As this money is paid at the end of the year for that year, she now has to find £1700 that had been “overpaid”. £1,300 of that relates to Housing Benefit and the rest is Council Tax Benefit. The Council Tax overpayment is especially galling because there is only one payment left for this financial year, the January payment. So as a result, her final payment will be triple in January.

Life as an unemployment statistic.
The Employment Support Allowance was introduced as a knee jerk response to the articles (largely in the Daily Hate and Daily Diana) about the millions “sponging” on incapacity benefit. Incapacity Benefit was passed by the Conservatives in response to similar stories about millions left on invalidity benefit. Incapacity Benefit was not an easy benefit to get.

There were Job Centre Plus Offices in some parts of London who did encourage some claimants to claim Incapacity Benefit instead of Job Seekers Allowance. It kept the unemployment count down. It was not an official policy, but some managers felt things were easier that way. This figure was certainly not millions.

So the big fanfare law is passed and it is implemented just as the worst recession in living memory kicks in. The DWP line -which even Ministers push- becomes one of please do not implement the law too rigidly. By too rigidly it means not at all.

After 26 weeks on Incapacity Benefit, if someone is still not available for work, they get treated as long term sick, benefit levels are paid at enhanced rates. On ESA, the “assessment phase” ends. The claimant is supposed to have a test (carried out by a DWP medical Officer – not always a Doctor and not their own GP), to see whether they are available for work. If they are not they are supposed to enter main phase ESA. Those tests have not been carried out. This has resulted in massive backlogs. On the plus side, large numbers of people have not been kicked from ESA to Job Seekers Allowance. On the negative side, is that those who are genuinely long term sick are not being moved on to main phase ESA. Their benefits are not being enhanced.

Until now. Now that unemployment appears to have peaked these backlogs are being tackled. With great rapidity and of course, the law is being adhered to. If Ministers did not want a law followed, they should not have passed it. Perople are finding themselves booted from ESA because they did not pass the “capability test”. They are told to sign on for JSA. In many cases these decisions are a rubber stamp decision. No full capability test has been applied, because the DWP is simply clearing the backlog. They must apply for JSA. If they are appealing the decision to end their ESA they are not available for work, so JSA is not payable. If they apply for JSA and get it, the original ESA decision is validated.

Those who do pass it are often having their main phase backdated to when it should have been paid from. All good for them, but then the HB tapers kick in and 85% of that money is then treated as overpaid.

Expect lots more of the cuts to Government expenditure to be faced by people on ESA.

Life as a Private Tenant.
Previous Housing Benefit schemes for those renting in the Private Sector penalised people who looked for more affordable properties. The cases exposed by the Mail of the families in Westminster and Ealing are not the fault of those respective LAs. They are not even the fault of the new Local Housing Allowance scheme. Previous schemes met the rent if it was reasonable for that area. The Housing Benefit Office was not allowed to say what was reasonable, although in some circumstances a “pre tenancy determination” could be applied for, from the Rent Service through the LA, which would reveal the maximum HB payable on a property. The effect of these rent restriction schemes meant that there was no downward pressure on the levels of rent charged or the benefit levels being paid out.

The Local Housing Allowance published the maximum levels payable for properties of a given size, within a defined area. (These areas are stupidly large). If a tenant found a property below the amount payable for their circumstances, they could keep the difference. In the trial areas, some tenants gained by as much as £50 per week. The DWP did not like this and cut the maximum gain to £15 per week. There was still a small incentive.
The Government gains from not as much HB being out and the tenant gains.

When LHA was being trialled, the impact of tenants looking to keep some of the difference between the maximum HB payable and the rent charged led to even boom areas such as Brighton and Lewisham having no increase in the level of rent payable for 3 years prior to the April 2008 roll out. Now that incentive will be removed entirely. There is no need for the tenant to look at properties at the cheaper end of the market. The ren charged will be the amount that HB will pay. The low income tenant, who did the right thing by the system loses their £15. HB costs rise again. The poor old tenant gets hit.

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  1. December 13, 2009 at 6:31 pm

    Well done – for creating balance – its a sickening almost fascistic UK at the moment with a new black lance of prejudice being stuck into those on benefits …I see many people in mental health who are injured by the system time and time again constantly “reviewing them” despite decades of proof they are sadly mentally health damaged individuals ..

  1. October 30, 2010 at 7:28 pm

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