Universal Credit: Sanctions and The Horror of Repayable Hardship Payments

It took me a while to get my head around the new policy of Repayable Hardship Payments and how it extends a four week sanction to seven weeks due to these payments being repayable!

Under the current JSA sanction policy Hardship payments do not have to be repaid, so as soon as the sanction period ends claimants go back to receiving their full benefit.

Under Universal Credit hardship payments MUST BE REPAID once the sanction period has been completed. In effect, the sanction period is extended until the hardship loan has been repaid.

I have calculated the figures below as weekly amounts, as it is easier to explain, although Universal Credit is paid monthly.

Jobseeker’s Allowance is paid at a rate of £73.10 for adults over 25.
Hardship Payments are paid @ 60% or £43.86
Hardship Repayments are immediately repaid at a rate of 40% of “loan” or £35.08pw
Hardship can be claimed on the 15^th day of a sanction if the claimant is not in a vulnerable group
The most common benefit sanction is 4 weeks

Number of Sanction weeks	Hardship payment per week (£)	Hardship debt accrued each week (£)
1	NIL Income	0
2	NIL Income	0
	Hardship Payments can be awarded from week 3 @60% of JSA award
3	43.86	43.86
4	43.86	87.72
	SANCTION ENDS

At the end of a 4 week sanction the Repayable Hardship Payment debt is £87.72
As stated above Hardship Repayments are repaid at a rate of 40% or £35.08 pw.

Number sanction weeks	Jobseeker’s Allowance minus hardship repayment (£)	Repayment Hardship at £35.08 each week	Outstanding debt
5	38.02	£35.08	52.64
6	38.02	£35.08	17.56
7	55.54	£17.56	0

The debt of £87.72 takes an extra three weeks to repay

so effectively the sanction has been

SEVEN WEEKS!!!!

AND

The longer the sanction the longer it takes to repay the debt!

Case study: One in-work UC claimant reported being sanctioned for long periods after missing multiple Jobcentre Plus appointments because of unpredictable working hours and variable care demands…

‘I’m on my court order for the eviction plus because of my arrears… I kept thinking, ‘Why is this happening? Why is this?’… I really was struggling. I fell behind on a lot especially because with the sanctions and then when I got poorly and I wouldn’t work and, because of the sanctions, I still wasn’t getting my main allowance. I was still getting only hardship of £100 odd and I still had to pay the £100, so I was very, very struggling with that… I just asked them, ‘Can you please explain what my money is because I really don’t know? I’ve never had a proper payment and just explain like am I still sanctioned?’ They said, ‘No, your sanctions have now come up’ but now every month I’ve had the hardship, I now have to pay all them back. So, I think it was like £2000 something that they’d actually given me over the year in hardship payments, so I’m still currently paying them off now… You’re in a rut like I’ve been with the bailiffs… I’ve never really been in a debt like that and for it to still carry on now to this day escalating, it’s not nice for people. It doesn’t give you much confidence. It doesn’t really make you want to go into work all happy and carrying on, do you know? It knocks you down and down and it wears you out.

It will take 70 weeks to pay back this loan back!

How Repayable Hardship Payments effect The Under 25’s

“If, for example, an individual was in receipt of universal credit at a rate of £249.48 per month (the standard allowance of under 25s), she might receive hardship payments of approximately £149.57 per month during the 13 week sanction period. If s/he then had to repay this at a rate of 40% of the standard allowance rate per month, the period during which her income was reduced by 40% would thus be extended from 13 weeks (the sanction period) to 32 weeks (the sanction period plus the period during which the hardship payment”

Child Poverty Action Group (CPAG) briefing in advance of the second reading of the Benefit Sanctions Regime (Entitlement to Automatic Hardship Payments) Bill 2015-16

I do not think that the consequences of this policy was fully understood when this legislation was passed into law but is an unforeseen consequence, never the less this situation needs to be remedied immediately:

I will be asking my MP to write to the Secretary of State for Work and Pensions Stephen Crabb MP to ask him to halt the trial of Repayable Hardship Payments that is taking place in Scotland immediately, and to ask him to look at the unintended consequence of this policy and change legislation as necessary.

If you feel as strongly as I do please email and or tweet Your MP

http://www.parliament.uk/get-involved/contact-your-mp/

and Stephen Crabb:

House of Commons, London, SW1A 0AA

Tel: 020 7219 6518

Email: stephen.crabb.mp@parliament.uk Twitter: @scrabbmp