Universal Credit – Extend the £2,500 surplus earnings threshold for one year from April 2025. The measure maintains the surplus earnings threshold at £2,500 for Universal Credit claimants for a further year until April 2026. This measure will be effective from 6th April 2025.
Fair Repayment Rate – The government is creating a new Fair Repayment Rate which caps deductions made through Universal Credit for debts at 15% of the standard allowance from its current level of 25%. Additionally, child maintenance deductions will be moved up the priority order before repayments of Advances. This will move them third in the priority list behind a loss of benefit penalty for benefit fraud and conditionality sanctions. It means that deductions in place of child maintenance will be taken before any deductions for rent arrears.
What impact could this change have?
- Claimants who are currently having their UC reduced by over 15% of their Standard Allowance could see their UC awards increase …… but this could mean that they are no longer paying off rent arrears or other debts and they may need to make other arrangements.
- Claimants who currently have a Third Party Deduction for rent arrears in place at the 20% rate will presumably have this reduced to 15%.
- Will this affect the amount of Advanced Payment that claimants can get.? Currently, for a New Claim Advance claimants can receive up to the amount of their expected first UC award. But the ‘repayment cap’ limits this to the amount they can be expected to repay within the time limit (i.e., currently the cap is 24 x 25% of SA). Either, this cap will reduce when the repayment rate reduces, or the DWP will need to extend the time limit for claimants to repay their Advance.
- Claimants who would be liable for a deduction in place of child maintenance but are currently having deductions to pay back an advance / for rent arrears / for some third-party deductions which currently have higher priority could stop paying back these arrears when the new rules are introduced.
EXAMPLE: Brian owes rent and child maintenance arrears. At the moment he is having deductions of £39.35 for rent arrears, £19.67 for Council Tax arrears and £36.40 for child maintenance arrears. From April, this will reduce to roughly £36.40 for child maintenance arrears and £22.62 for rent arrears (based on this years SA), with the deductions for Council Tax arrears stopping.
Pension Credit – Inclusion of Housing Element in Pension Credit in 2026. Currently, State Pension age claimants are expected to claim help towards their rent and eligible service charges through Housing Benefit. However, there has been a longstanding plan to amend Pension Credit so it includes help with these housing costs. it was announced that the government plans to bring together Housing Benefit and Pension Credit for new claimants from 2026.
There are a couple of areas of concern regarding this process. Firstly, the length of time it can take the Pension Service to assess a new claim could mean a delay in pensioners getting help with the rent. Secondly, for HB there is an upper savings limit of £16,000, whereas Pension Credit currently has no upper savings limit. How will this be dealt with when the two are combined? So far, the government has not given any indication.
Once Pension Credit includes help with rent, this will mean no one will be able to make a new claim for Housing Benefit unless they are living in ‘specified’ or ‘temporary’ accommodation. The government has not mentioned any plans for moving these people off Housing Benefit. It is currently unclear how long Housing Benefit will remain in existence.
Carer’s Allowance – Carer’s Allowance: Increasing the earnings limit to the equivalent of 16 hours at the National Living Wage from April 2025. This measure will raise the Carer’s Allowance Weekly Earnings Limit from £151 a week to the equivalent of 16 hours per week at the National Living Wage (£196 a week) from 7th April 2025. The Weekly Earnings Limit will then increase in line with future National Living Wage increases.
We assume that Carer’s Support Payment in Scotland is likely to follow suit. Northern Ireland has already done so. This means that those currently working and receiving Carer’s Allowance will be able to increase their hours without losing their entitlement to Carer’s Allowance. Although, if they earn just 1p more than the limit, they will lose their entitlement – a rule which hit the headlines earlier this year when carers were told that they had been overpaid thousands of pounds.
The change will also mean that some carers who are currently earning too much to be entitled to Carer’s Allowance will become entitled to it. It is important for any carer to check the impact that being paid Carer’s Allowance could have on the benefits of the person they are caring for. If that person is getting Pension Credit, Housing Benefit, Income-Related ESA, Income Support or Income-Based JSA, then their benefits could reduce (if they lose entitlement to the Severe Disability Premium).
Where the carer is getting a small amount of Universal Credit, then it is worth checking that getting paid Carer’s Allowance doesn’t take them off UC. Carer’s Allowance will reduce their award £1 for £1. Losing UC could mean losing other passported benefits such as free prescriptions too.
Benefit Uprating – Working age benefits will be uprated in full in 2025-26 by the September 2024 Consumer Price Index (CPI) inflation rate of 1.7%. The government will maintain the State Pension Triple Lock for the duration of this Parliament. The basic and new State Pension will increase by 4.1% in 2025-26, in line with earnings growth, meaning over 12 million pensioners will receive up to £470 per year.
Household Support Fund and DHPs – To protect vulnerable people, the government will provide £1 billion to extend the Household Support Fund and Discretionary Housing Payments in 2025-26, which will be used by local authorities to address immediate hardship and crisis.
Minimum wage increase – Rising from £11.44 to £12.21 an hour from April 2025 (and the rate for 18-20 year olds rising from £8.60 to £10.00 an hour). This represents an increase of over £1,400 to the annual earnings of a full-time worker on the National Living Wage and is expected to benefit over 3 million low paid workers across the UK. As this is a higher % rise than the UC April uprating it may lift some off UC and therefore passported benefits.
Reforming Health and Disability Benefits System – There was little in the Budget about the potential reforms suggested by the previous government apart from the fact that the current government will keep consultation going. They did announce a £240m ‘Get Britain Working’ package to include work, skills and health support for disabled people and those facing long-term sickness. Work and pensions secretary Liz Kendall is expected to reveal her ‘Get Britain Working’ white paper, which will entail details as to reform for welfare and employment support, imminently.
Curtesy of www.housingsystems.co.uk/News/News-Articles/id/185
