Frankie W
What aspects of Universal Credit should be changed so that it supports people on low incomes better?Short term fixes:
- I’m starting a part time Masters degree in September, Universal Credit treats 30% of the Masters Loan as my income and tapers my UC award accordingly but 80% of my loan is used for tuition fees meaning I’m tapered for about £1,000 which in fact is in the bank of my university rather than my pocket. I think the disregard should be either changed to 20% or whatever is left after tuition fees are paid (this could easily be proven as we currently do now with evidence of childcare payments).
- UC tapers your tax (and NICs) income but student loans are deducted BEFORE the taper. Student loans are a de facto tax and should be treated as such for UC purposes.
- we’ve already mentioned to Ali McGovern that UC could use the CCGPS (Childcare Grant Payment System) that Student Finance England use to pay childcare up front to the provider and then invoice us for 15% rather than expect us to fund 100% and claim back 85%. Equally we’d ideally like it to reimburse 100%.
- The other big change would be to make LHA reflect real rents. You won’t find a 2 bed to rent in Newbury cheaper than the £1,200
I pay but LHA is set at £895 for 2 bed and £1,200 for 3 bed!
- Finally, Boris Johnson was (in my humble opinion) a disaster but even a stopped clock is right twice a day. He had an excellent idea to allow UC claimants to claim for mortgage costs not just interest. This would be transformational for aspirations as it would allow UC claimants to access mortgages - particularly for shared ownership - instead of being trapped in the private rented sector. The advantage to the state must surely be clear: as mortgages are paid off the amount the state pays is reduced as opposed to ever rising rents.
Medium term:
- Reduce the taper rate considerably to make work really pay.
Longer term:
- I’ve been doing some thinking on how Uc can better interact with the tax system to avoid those high marginal rates where taper and tax collide. I need more time to properly sketch these out but I do think there are ways to resolve things to make universal credit and tax simpler without a huge increase in government costs.