SDLP Ballyarnett candidate Rory Farrell
Judges in London recently ruled that the Department of Work and Pensions Minister had ‘wrongly interpreted’ regulations when calculating Universal Credit payments and that this had disadvantaged working families.
Mr Farrell said: “Working families in Derry are losing out due to fundamental flaws in the Universal Credit system. The method used to calculate payments is unfair, reliant on employers reporting wages on time and can lead to massive rental debts.
“Universal Credit replaced a host of benefits including Working Tax Credit and Housing Benefit, and some families on the new benefit are beginning to witness its pitfalls.
“Working Tax Credit payments were based on expected earnings for the year, whereas Universal Credit payments are based on earnings reported to HMRC in the previous month.
“Working in Colum Eastwood’s constituency office in Northside, we are contacted on a weekly basis by people receiving no Universal Credit payments due to inaccurate or late reporting of their wages to HMRC.
“If wages are reported late then Universal Credit payments can be affected. It all comes down to the Assessment Period, the month long period preceding payment which is used to calculate entitlement to Universal Credit.
“We’ve had countless incidents where employers have reported wages late which resulted in two monthly wages going into one Assessment Period, giving the impression of massive monthly earnings. This has led to no Universal Credit payment the following month.
“The flip side is that there will then be a preceding Assessment Period with no wages reported which leads to an inflated Universal Credit payment.
“It all financially balances out over the two-month period but it makes it very difficult for families to budget.
“But the critical and most worrying aspect is the impact on Housing Costs. Most people on Universal Credit get help with Housing Costs which goes directly to the landlord, the equivalent of the old Housing Benefit system.
“In a month where no wages are reported they get an inflated Universal Credit payment with Housing Costs paid directly to the landlord. In a month where two wages are reported, they get no Universal Credit payment and the landlord receives no rent.
“The Universal Credit payments balance out over two months but the landlord only receives one month’s rent, leaving the claimant in rent arrears.
“One real life example is where a young Derry mother’s employer reported wages ten days late and she now owes her landlord nearly £400 in rent. Had the wages been reported on time, she would owe her landlord nothing.
“The sad reality is that if your employer reports your wages late to HMRC that it could cost you a month’s rent.
“We’ve asked Universal Credit to recalculate monthly payments and Housing Costs based on the dates employees were actually paid, but they’ve said the system doesn’t allow for this.
“The system must change. Entitlement to Universal Credit must be calculated on actual monthly income, not calculated on when it was reported to HMRC.
“The SDLP voted against all aspects of Welfare Reform. Universal Credit is wreaking havoc on our society and it should be scrapped.
“In the absence of that, the British Government must take decisive action to make it fairer system for all,” added Mr Farrell.
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