HMRC LOAN CHARGE BRIEFING PACK

HMRC publishes briefing pack on the loan charge.

On 18 March 2019 HMRC published this Loan Charge Briefing Pack for journalists to set out is position as 5 April approaches explaining its view that the Loan Charge is fair and necessary.

It is not available online yet so it is published here for the benefit of everyone who wants to see it.

Publishing it is not an endorsement of its contents on which I make no other comment.

It is Crown Copyright © 2019.

Paul Lewis
18 March 2019

CLAIM £200 to £500 FOR FLIGHT DELAYS

UPDATED 5 January 2021

This blog looks at some of the fiddlier details of getting compensation for flight delays. Since the UK left the EU the compensation rules have been written into UK law. They are explained in this new blog. 

All the European court judgements mentioned here still apply as they were all retained in UK law when we left the EU. Any decisions made by European courts from 1 January 2021 will not apply in the UK.

What is extraordinary?

The European Regulation EC 261/2004, which makes the compensation rules, gives airlines a get out clause for what are called ‘extraordinary circumstances’. In other words if the delay is absolutely not the airline's fault then compensation is not due.

A dispute is brewing about delays caused by strike action. In 2018 the European Court of Justice ruled that a wildcat strike by airline staff – one that was not properly balloted or announced – was not an extraordinary circumstance after the airline had made a surprise announcement about restructuring. So compensation was due for the delays it caused. The Civil Aviation Authority has now said that strikes are covered by the compensation rules. In particular the strike by Ryanair crews in July 2018 is covered. Ryanair, BA, and Air France disagree. The dispute may end up in court. Strikes by workers outside the airline such as air traffic control or baggage handlers are not covered by the compensation rules but strikes by workers within the airline are. 

Technical issues

Airlines can no longer use technical issues including mechanical failure as an excuse for not paying compensation. Many airlines have been calling technical issues with their aeroplanes extraordinary circumstances and refusing to pay compensation for the delays they cause.

But in June 2014 in a clear and unanimous judgment the Court of Appeal decided in a case against budget airline Jet2 that technical issues were part and parcel of running an airline and that the delays they caused could in no sense be ‘extraordinary’.

Jet2 tried to get the Supreme Court to look at that decision. But it refused to do so. The judgement releases tens of thousands of claims against many different airlines which have been held pending the court case. And any fresh claims for delay compensation because of technical issues such as mechanical failure should be successful. One law firm estimates more than two million passengers a year are delayed due to technical issues.

Some airlines tried to claim that unexpected or hidden technical defects were extraordinary circumstances. But in its landmark case in September 2015, van der Lans v KLM, the European Court of Justice ruled that such unforeseen defects could only be allowed as exceptional if they were, for example, a defect the manufacturer or a regulatory body discovered and announced. Anything else was just a normal part of running a complex system like an airline.

Back six years

Another important decision by the Court of Appeal was in a case against Thomson Airways. It ruled that cases for compensation for delay could go back six years rather than two. Thomson had been refusing claims which were more than two years old on the grounds that the Montreal Convention only allowed claims for that period. But the Court of Appeal decided unanimously that local law prevails so claims can go back for six years in England and Wales. The six year limit applies in Northern Ireland but it is only five years in Scotland. See section Jurisdiction below.Thomson also tried to get the Supreme Court to revisit that decision. And again the Court refused saying the airline had no arguable case. So all airlines must now allow compensation claims for delays that occurred up to six years ago.

A further case Goel & Trivedi v Ryanair was tried in Manchester in August 2015. Ryanair claims that a provision in its own terms and conditions limits claims to two years which overrides the EU Directive. Ryanair lost the case but is appealing. It is possible that Ryanair and other airlines may try to delay claims for delays between two and six years ago until this case is finally settled. However, in a statement in September 2015 Ryanair said it did allow claims up to six year, though there is a lot of evidence that it does not.

Application

The EU Directive on compensation applies to cancellation. But the courts have interpreted the law so a delay of at least three hours is considered to be the same as a cancellation and give rights to compensation.

The delay must be at least three hours and that is measured at the arrival airport. So a flight that leaves more than three hours late but makes up the time and arrives 2h59m late would not be covered. The arrival time was recently defined by the European Court of Justice as the moment when at least one of the aircraft doors is opened at the arrival airport.

Compensation applies to the whole journey even if the flight involves a change of aircraft at an airport outside the EU as long as if it was booked as one journey and departs from the EU. This was decided by the European Court of Justice on 31 May 2018

Compensation for cancellation is more complex but similar. If your flight has been cancelled within seven days before the original flight time - for example once you are at the airport - compensation will almost always be paid. If you are not offered an alternative flight it will be paid at similar rates to those above. If you are offered an alternative flight but it arrives two hours later - or departs one hour earlier earlier - than the original flight then similar compensation will be paid. The rules are complex but always claim if a flight is cancelled. Compensation for flights cancelled by the airline with more notice than seven days are different.

These rights are separate to any money or vouchers for a hotel, travel, or food paid by the airline. It has to make those payments as well even where there are extraordinary circumstances which prevent compensation being paid.

Exceptions

Airlines can get out of paying if the delay or cancellation was due to 'extraordinary circumstances'. There is no definition in the law but that can include industrial action outside the airline's own personnel, extreme weather, war, terrorism, sabotage, political or civil unrest, hidden manufacturing defects, and bird strikes. But it can no longer include technical issues such as mechanical defects even if they were unforeseeable. Nor can it include computer system failures as large companies should always be available. In rare circumstances computer failure due to a major hacking attack may be argued to be 'extraordinary'. It probably does not include strikes by the airline's own staff, though that is subject to dispute.

Jurisdiction

Although the EU directive applies throughout the 28 member states of the EU, the Supreme Court ruling only binds courts in England and Wales. Lawyers say it would be 'persuasive' in Scotland and Northern Ireland. 

Enforcing your rights
In England and Wales you can use the online service via the Government website.

The court cases to cite are: 

• For strikes Helga Krüsemann and Others v TUIfly GmbH 17 April 2018
• For connecting flights Claudia Wegener v Royal Air Maroc SA 31 May 2018
• For time limits, Dawson v Thomson Airways [2014] EWCA Civ 845. 
• For technical issues, Jet2.com v Ronald Huzar [2014] EWCA Civ 791.
• and the latest case 17 September 2015 on technical issue van der Lans v KLM C-257/14 
• The Supreme Court refusal to hear the further appeals.
• The European Court of Justice on when a plane arrives.
• The Liverpool case Allen v Jet2.com refusing leave to delay claims.
• Six year delays Goel & Trivedi v Ryanair  

Don't let attempts to circumvent the court rulings put you off. The more difficulties airlines put in the way the fewer people will have the determination to pursue the case and get compensation. So make sure you pursue your claim and go to court if need be.

If an airline offers to pay the compensation in vouchers instead of money you are entitled to refuse and demand money.

The CAA has useful information on its website about flight delays and cancellations and makes it clear that strikes among the airline's staff are not an extraordinary circumstance. 

If you are delayed the airline is obliged to explain your rights at the time of the delay. In the past many have not and on 21 March 2015 the Civil Aviation Authority took action against Are Lingus and Wizz Air to force them to obey this part of the Directive.

Write to the airline to make the claim. State that you are claiming for delay or cancellation under Regulation EC 261/2004 which is now part of UK law as amended. Don’t worry if you no longer have boarding passes or ticket details. As long as you can identify which flight you were on the airline will have your details on its manifest. If any airline refuses a claim you may have to go to court to enforce your rights. You can do that in a court in the country where (a) the flight landed or (b) the flight started within the EU or (c) the airline is based.

In Scotland claims have to be made through the Sheriff Court - click here to learn more.

In Northern Ireland use www.nidirect.gov.uk

Be determined

Expect some airlines to be difficult and try to put you off or delay matters. If the airline sends you a document headed Draft list of extraordinary circumstances following the National Enforcement Bodies (NEB) meeting on 12 April 2013 write back to say that list has no legal status, has been overtaken in England and Wales by the Appeal Court and Supreme Court rulings, and that you are relying on the law as set out in Regulation EC 261/2004 as amended in UK law. 

Ryanair has refused to pay claims where the flight originated in Edinburgh as it is outside the jurisdiction of the Supreme Court. Ryanair also resists claims in some other circumstances. On 18 September 2015 the Civil Aviation Authority began enforcement action against Ryanair.

Get help

A new online claiming tool has been launched by Resolver. It makes no charge for its service. Never use a claim management company. It will take 40% of your compensation and may or may not be good at the job.

The consumer organisation Which? also has a useful guide to claiming compensation yourself.

You can get some advice free from the Civil Aviation Authority at www.caa.co.uk. If an airline has refused your claim the CAA offers an arbitration service. Its decision is not binding on the airline - though they usually follow it - and there have been long delays in the past as the CAA had inadequate staff numbers to handle the volume of cases. 

If you feel you need professional help you can use the lawyer Bott & Co which specialises in compensation for flight delays. It has an online checker to see if you have a claim or not. If it takes a case then it charges 25% plus VAT (so 30%) of any compensation obtained plus a £25 administration fee (including VAT) per passenger. Altogether that will be more than a third of your compensation. There is no charge if you lose.

Originally made 25 July 2018

vs. 4.00

18354

WHY YOUR GAS BILL IS WRONG

Domestic gas users are being overcharged by an average of £46 a year. That is the claim by an energy firm Canetis Technologies.

More than 20 million households use mains piped gas to provide hot water and central heating and often to cook their dinner too.

The way gas is charged for is an approximation. Canetis has calculated that three errors in these approximations leads to us being overcharged by an average of £46 a year.

Origin
Gas comes into the country from the North Sea, from Europe, and by tanker mainly from the middle east. It then passes through 190,000 miles of pipes and ends up flowing into what is usually a rather primitive meter in our home.

That meter measures the volume of gas passing through it. Traditional meters use a pair of bellows to measure the gas flow. The bellows then push a plastic clockwork mechanism to convert that flow into a numerical display which records either cubic metres (cu.m) or, in older and often greyer meters, cubic feet.

Formula
That volume then has to be converted into the kilowatt-hours units which energy firms charge us for. The formula used to make that conversion will be somewhere on your gas bill and should look like this:

Units used x the calorific value of the gas x a volume correction of 1.02264 divided by 3.6.

Definitions
1. Units used is the volume of gas recorded by the gas meter in cubic metres or cubic feet.

2. The calorific value of the gas is the amount of energy stored in the molecules of the gas.

3. The volume correction takes account of the average pressure and temperature of Great Britain which is different from the standard used to work out the calorific value of a cubic metre of gas.

The same amount of gas – the same number of molecules which store the energy which is released when it burns – will not fill a constant volume. As the pressure rises the molecules are squeezed together and the volume falls. As the temperature rises the molecules get more excited and the volume increases. That means the same volume of gas at different temperatures and pressures will give different amounts of energy when burned.

When the energy stored in a volume of gas is calculated the international standard is to use a temperature of 15C and atmospheric pressure at sea level of 1013.25 millibars (mb).

This correction adjusts that calorific value to take account of the temperature and pressure of Great Britain.

Each of these three parts of the formula is subject to error. The final part is not.

4. Divided by 3.6. Calorific value is measured in MegaJoules per cubic metre. A MegaJoule (MJ) is a million Watts per second. So to convert a MegaJoule (MJ) to a kiloWatt-hour (kWh) you multiply by 1000 and then divide by the number of seconds in an hour. So 1000/3600 = divide by 3.6. That is the one accurate number in the formula!

Errors

1. Units used
The energy technology firm Canetis claims that old style meters systematically overstate the volume of the gas passing through them. They are tested over a wide rage of gas flows. Low flows overstate the volume; higher flows underestimate it. But the meters are limited in the flow they are allowed to use and modern gas appliances tend to use lower flows anyway. The result is that the actual flows are always in the lower part of the range where the volume is systematically overstated.

2. Calorific value
The calorific value of natural gas varies depending on its exact composition - different sources have different mixtures of gases. It will be between 37.5 and 43.0 MJ per cubic metre.

Great Britain is divided into seven regions reflecting where the gas arrives. The calorific value of the gas in those regions is measured every day. The value on your bill is the average of those daily amounts in your area over the days the bill covers . It will therefore be approximate but the hope is that the over- and under-estimates will average out to zero.

3. Volume correction
In 1996 the Government decided that the international standard temperature of 15C and pressure of 1013.25mb for measuring the energy in a volume of gas were not correct for Great Britain. The average temperature in GB was lower at 12.2C. So the measured volume at that temperature was lower than it should be. And despite the UK being at an average height of 66m above sea level, when the pressure inside the meter was added it came to 1026mb, which is higher than the standard. So again the measured volume is lower than it should be.

As both errors lower the volume, the measured volume was multiplied by 1.02264 to correct it. This amount is set down in law.

Canetis and other engineers claim the assumptions behind the volume correction are wrong.

Pressure: recently analysed postcode data from the Office for National Statistics shows that GB homes are on average slightly higher than 66m above sea level, and the meters are normally above floor level. So the pressure is lower at the meter and the volume of gas greater than the regulations assume.

Temperature: the actual ambient temperature over the year is around 12C but most meters are located indoors in heated rooms so gas enters the meter at a warmer temperature than outside, again raising the volume.

So the volume correction is simply wrong.

Overcharge

The result is that these three errors

• meters which overstate the volume flowing through 
• higher temperature at the meter than allowed for
• lower atmospheric pressure at the meter than allowed for 

all create an over estimate of the volume of the gas passing through the meter for the standard energy contained in it. So charging by volume overcharges us for the energy stored. Canetis claims the average overcharge in England is £46 a year.

Action

Under the rules governing gas nothing can be done about any of these factors. They are all set in various laws and standards. 

All customers can do is try to ensure that their gas meter is as low and cool as possible rather than high up in a heated room. 

vs. 1.01

16 May 2018

OXFORD UNIVERSITY TO ABOLISH STUDENT FEES

One of Britain's top universities is to abolish student fees after the Supreme Court allowed it to charge a royalty on every use of English words online.

From 6 April 2018 Oxford University will use a monopoly granted by Henry VIII to demand money from the one billion people who write online in English. They will automatically be billed a ‘nanocharge’ of 0.0001p by Oxford University Press for every word they publish online if it is in the Oxford English Dictionary. Fees from the estimated fifty trillion English words written online each year will allow the university to make education free at all levels.

The Oxford English Dictionary itself only began in 1859 and rapidly became the definitive record of the language. 

But under Letters Patent of 1523 Henry VIII granted the University “our speciall lycence” to collect money “from thoos persons who prynt in the language of Englonde” and use such money “for the supporting and maynteynyng of the vnyuersite of Oxenford” and the order “shulde passe and be sealed vnder our greate Seale as by our said comaundement as ye haue more parfite knaulage of the language of Englonde than any other”.

Henry VIII Letters Patent of 1523 granting Oxford University rights to all English words ‘in perpetuity’. 

The royalty could have been charged at any time since 1523. But early attempts to levy printer’s type led to riots against the so-called “taxes on knowledge”. The situation changed this week when the Supreme Court held unanimously that the words of the Letters Patent could not be clearer” and gave Oxford the right “in perpetuyte” to the copyright on the words in its Dictionary. The court rejected a counter-claim by rival publisher Collins that the Letters Patent were repealed by the Monopolies Act 1624. “No such provision exists in the Statute” said the President of the Court and Oxford graduate Lord Justice Neuberger. Significantly, Justice Lady Hale, the Deputy President who went to Cambridge, did not dissent.

Professor Fiona Nomura, a Proctor of Oxford University Council, told me in an exclusive interview

“For nearly half a millennium Oxford has allowed England, Britain and the world to use the English language free of charge. However, the University is increasingly uncomfortable at Government demands to raise the fees charged to our undergraduates, this year to £9,250. So Congregation decided to use this ancient right to levy a charge on every online use of the words which are the University's copyright and make education at this world beating institution free again.”

She pointed out that Henry VIII himself was a great patron of education and founded several grammar schools and colleges.

Oxford claims the amount “will be too little for an individual to notice but will mean much to our students”.

All words published online will be compared with the online Dictionary and an automatic PayPal debit applied for each word in it. The nanocharge of 0.0001p levied on the estimated 500 trillion online uses of English words each year will raise £500m – more than enough to replace the £110m in fees paid by Oxford’s 12,000 undergraduates. The balance will be used for bursaries and to support its 11,000 postgraduates – who Congregation called “the entrepreneurs of tomorrow” in the so far secret meeting that made this historic decision.

However, Professor Angie Buff of Trinity College Cambridge said the move was a backward step. “It will lead to people misspelling and making up words to try to avoid the nanocharge. They may even start tweeting in foreign languages. It may help a few Oxford students but it will damage literacy and, ultimately, English itself.”

The levy will cover all websites and social media including blogs, Twitter, Facebook, LinkedIn, and even the subtitles on YouTube. Twitter alone publishes 3 trillion English words every year. Oxford is working with GCHQ to extend the nanocharge to encrypted services such as SnapChat.

Professor Nomura confirmed that the copyright only extends to the 600,000 words defined in the Oxford English Dictionary. “Neologisms such as ‘selfiecide’, ‘mansplaining’, and ‘nmh’ will still be free to use, should any ignoramus wish to do so.”

She warned however that the fee would be levied on one new word. At an emergency meeting of the Words Admission National Council English Register this week ‘Brexit’ was added to the Dictionary with immediate effect. Such speed is unusual for an organisation which took twenty-four years to admit the word ‘snozzle’. Professor Nomura denies the haste was to cash in on the word’s popularity. "It is simply because the definition is so clear" she said "Brexit means Brexit," Fi Nomura smiled, “end of."

UPDATE: I have learned that the nanocharge will be brought forward five days and will be applied from 0001 on Sunday 1 April.

Vs 2.0001

1 April 2018

CREDIT CARD FEES BANNED

From 13 January 2018 charging customers more if they pay by personal credit card is banned.

Before the ban people paying for goods or services online were often made to pay an extra fee if they chose to pay by credit card. These surcharges were typically 2% but could be as high as 5% of the price and often were not made clear until the very last moment.

Firms made excessive charges despite a cut in the fees which credit card providers charged them and in defiance of a law passed in 2013 which stated a surcharge could only reflect the actual cost of accepting a credit card payment,

So from Saturday 13 January 2018 such charges are banned completely. And not only for credit cards - the ban extends to any plastic payment and to PayPal, ApplePay and other electronic payment systems.

Enforcement
The law is clear but unfortunately how it will be enforced is not. Enforcement is principally in the hands of the local Trading Standards office. But the Trading Standards Institute has told Radio 4's Money Box programme that it is unlikely to be a priority.

"With no extra funding, budgets cut by over 56% within a decade and 250+ pieces of legislation to enforce and consider – it is unlikely to be a priority for any local TS." 

If a major firm is illegally surcharging people widely over the UK then the Competition & Markets Authority can also intervene.

Self-help

If you are charged extra for using a credit card or any other form of payment then you have the right to demand a refund yourself.

You could email the Chief Executive of the firm something like this

"When I bought XXXX from you on <date> you applied a surcharge of x% to the price because I paid by credit card.

I am writing to you for a refund of that surcharge under Regulation 10 of the Consumer Rights (Payment Surcharges) Regulations 2012.

Since 13 January 2018 such surcharges are illegal under Regulation 6A(1) of the Consumer Rights (Payment Surcharges) Regulations 2012, as amended by paragraph 12 of Schedule 8 to the Payment Services Regulations 2017.

I look forward to hearing from you. Should you not pay the refund within 14 days I shall pursue my case through the Alternative Dispute Resolution process or take action in the courts."

Find the CEO's email here.

Report them
You should also report the matter to trading standards. The way to do that is through the Citizens Advice Consumer Service on 03454 04 05 06. If Trading Standards get enough complaints about a particular firm it may take action. If the trader is based outside the UK but in the EU or Iceland, Norway, or Liechtenstein then the case will be passed to the UK European Consumer Centre. You can call them direct on 01268 88 66 90.

What firms might do
Firms can work round the new law in several ways.

• Refuse all credit card payments - this is the line that HMRC has taken. From 13 January 2018 you cannot pay your tax by credit card. The new law will not prevent a firm from setting a lower or upper limit for accepting credit card payment. 
• Impose one charge for any means of payment - even if you turn up with cash. As long as the charge is the same regardless of how you pay that is lawful.
• Put up prices generally to cover the extra cost. 

Exemptions
The ban applies to any retail payments when both parties are located anywhere in the European Union or in Iceland, Norway, and Liechtenstein. So it would not normally apply if you bought tickets online directly from an American airline.

The ban applies to any charge made from 13 January. But a charge made after that date under a contract entered into before 18 July 2017 is allowed.

It does not apply to goods or services bought using a corporate credit card. But even then the surcharge cannot exceed the actual cost to the company of that means of paying.

Further information
This Government guidance is useful for detail.

The Regulations implementing this law were made as a result of the EU Payment Services Directive 2015/2366.

Paul Lewis
version 1.02
13 January 2018

UNHAPPY CHRISTMAS

Around 25,000 people in weekly paid low paid work who top their wages up with Universal Credit will get less benefit or none at all in the month leading up to Christmas. 

Introduction
Universal Credit is supposed to make work pay. It uses real time information passed to Her Majesty's Revenue & Customs (HMRC) by employers to adjust the benefit each month according to how much income is earned. So the Department for Work and Pensions (DWP) should know immediately if income changes in the month it is assessed over.

The underlying problem for weekly paid people is that weekly into monthly doesn't go exactly and they tend to budget weekly when the bulk of their money comes in, not monthly as the Department would like them to.

Jane
Jane lives in Altrincham with her daughter Zoe aged 5. After her well-paid partner left her she claimed Universal Credit on 9 September 2017. Her assessment period started seven days later (the infamous waiting period) and thus ran from 16 September to 15 October. She then had to wait seven days for the benefit to be credited to her bank account. It arrived on 22 October and will do so on the 22nd of every month. 

She is paid weekly and her earnings are constant so she expects the same amount of UC each month. In fact the amount she gets each month will depend on her income in the assessment period which runs from 16th to the 15th of the month. 

Jane works 40 hours a week at £12.50 an hour. Her Mum looks after Zoe outside school hours. In October and November she got £220 UC which was a great help. Her December payment is due on 22 December and she is glad it will come just in time for a late Christmas shop and stop her getting overdraft charges. Her employer pays her weekly on a Friday. In assessment period leading up to her her December payment she is paid on 17 and 24 of November and 1, 8, and 15 of December. Those five pay packets mean her income is 25% more than it was in the four pay packet months of October and November. That is enough to stop her entitlement to Universal Credit in December.

Although she has had extra income from her job in that assessment month her weekly pay is always earmarked to pay £520 a month rent, food, utility bills, council tax, and travel to work costs. She was counting on the usual Universal Credit payment to top up her earnings on 22nd to give her a bit more for her children after Christmas. When it is zero Jane has to abandon those plans as she budgets weekly and is not sure why the payment has stopped. 

Chris
Chris is 22 and moved to Southend-on-Sea in the summer to get a job working 38 hours a week on £7.05 an hour minimum wage. Chris had been homeless and in a hostel for some months. He rents a one bedroom flat which is allowed in those circumstances under Universal Credit rules. After tax his pay is £245 a week, nearly half of which goes to pay his rent. So when he is told he can get Universal Credit he is very pleased. He claimed it on 9 September too and was puzzled he had to wait so long for any money. But nearly £140 arrived in his bank account on 22 October and was very helpful, not least to pay back some money his work mates had lent him during his six week wait. The same amount arrived on 22 November and friends told him he would now get that every month. But it did not arrive on 22 December. He thought it was late over Christmas but it was still not there when he went back to work on 27th. 

By the end of the week his boss said he should call the Universal Credit helpline and kindly let him use the office phone in his lunch hour. He was told the lack of a payment was correct as he was no longer entitled to Universal Credit. He now has to reapply for his benefit before 15 Jan to make sure he gets his next payment on time on 22 January. He has to do that online. When he first claimed he used the local library. When he finally gets a time slot to use a computer there he is told he needs his username and password which he cannot remember. After two goes he answers his security questions and can eventually log on and re-claim. Not everyone would be so lucky

Why it happens
The experiences of Jane and Chris are not errors. They happen because Universal Credit is assessed over a period of a month - from the nth day of one to the (n-1)th day of the next (If the assessment period begins in the last days of the month, then it assessed from the end of one month to the end of the next). So the assessment period can be 31, 30, 28, or 29 days. The money is paid into a bank account seven days later. In four out of the twelve months in the year people who are paid weekly will have five paydays. In the other eight they will have four paydays. When their income in the assessment period changes that alters the amount of their universal credit. In the periods when they have five paydays the benefit will be reduced and in some cases it will disappear altogether.

Neil Couling, the Director General of Universal Credit agrees. Responding on Twitter @neilcouling when I first reported this story, he tweeted

• This so called problem would have occurred at Christmas 2013, 2014, 2015 and 2016. In fact it is just the system working as intended, adjusting to changes in household income.  

The same thing will happen to Jane and Chris four times every year. The next occasion will be the payment due on 22 April 2018, just after Easter. The effect is they will have to reclaim their benefit every four months. 

Numbers
The latest figures from the Department for Work and Pensions (15 November 2017) show there are 250,000 people on Universal Credit who work and the DWP has told me that 67,000 of them are paid weekly. Every month about a third of those weekly paid people will find that they have five pay days taken into account and their money will be reduced. The DWP has confirmed it will happen to 25,000 claimants in December, as it will every month. For some, like Jane and Chris, the rise will be enough to wipe out their entitlement to Universal Credit. Others will just get less Universal Credit. The Department points out that their wages and their total income will be higher in five week assessment periods. That is strictly true. But as the first payday arrives on the 17th and the next on the 15th of the next month it is not much help when juggling regular outgoings on a limited weekly budget, especially over Christmas.

The DWP has also said in a @dwppressoffice tweet

• UC payments adjust to people’s earnings so they get a stable income each month including over Christmas

But the figures show monthly incomes are not stable. Chris will have a total income from wages and benefit of £1122 in months with four weeks and £1229 in five week months - a difference of around £107 which is hardly stable. Jane's monthly income changes by £185.

The problem is recognised in the official explanation of payment cycles which confirms that people paid more frequently than monthly will face reduced or missing Universal Credit payments in some assessment periods.

• You will need to be prepared for a month when you get 5 wage payments in one assessment period and budget for a potential change in your monthly Universal Credit payments.

As Neil Couling said in his tweet, this is how Universal Credit is supposed to work. Which does not of course make it right or convenient. But, again as the DWP and many welfare rights specialists say, it is a lot better than tax credits which are normally worked out on income a year in arrears.

Re-claiming
If the benefit does vanish, the method for re-claiming is different depending on the Jobcentre where the claim was first made.

• In Live Service areas (also called Gateway areas) the claim should just be rolled over automatically. It only ends if an individual is above the income limit to get some benefit for more than six consecutive months. Live Service areas will disappear by the end of 2018.
• People in Full Service areas - like Jane and Chris - will have to reapply. This should be a simple online process and if done promptly the claim should be accepted and they should keep the same assessment period and payday.

The Jobcentre Plus or Work Coach should know which sort of area it is. It can also be checked on this website. If the benefit is reduced rather than extinguished it will be higher the next month.

Other payment periods
The problem does not just affect those who are paid each week. People paid fortnightly will have two months in the year in which they get three pay packets instead of two. Anyone who is paid four weekly will get two pay packets in a single month once a year. Even those paid monthly can be affected if their firm brings forward a payday to before a Bank Holiday, such as Christmas or Easter, and that means there are two monthly payments made in one assessment period. Tax rebates and payments from the Student Loans Company can also affect one month's benefit. In all those cases it is more likely than with weekly payments that the Universal Credit will be wiped out and a re-claim will be required in Full Service areas.

Roll out

As Universal Credit is rolled out across the UK during 2018 all areas will become Full Service areas. New claimants of working age benefits will normally have to claim Universal Credit rather than the old benefits such as Tax Credits, Housing Benefit and the income-related versions of Jobseeker's Allowance and Employment and Support Allowance. There are some exceptions but those will probably end from December 2018 when the roll out is complete. Note that the contributory versions of Jobseeker's Allowance and Employment and Support Allowance will still be available for up to six and up to twelve months regardless of income to people who have sufficient National Insurance contributions and fulfil other conditions.

In the run up to Christmas 2018 many more people will be affected by these five and four week paydays as the number of those claiming Universal Credit will have risen due to the national roll out for new claimants. After 2018 people already getting the old benefits will be moved in stages to Universal Credit. By 2022 everyone on the old benefits will have been moved to Universal Credit and an estimated eight million people will get it. On present figures that would mean 300,000 working people who are paid weekly would face a lower or missing UC payment in December if their Assessment Period has five paydays in it.

The calculation

Before the DWP provided a figure of 25,000 there was some dispute about how many people are in Jane's position. The calculation is fiddly but perfectly possible.

• Take the 31 possible UC payment days in the month before Christmas from Friday 24 November to Saturday 23 December
• Look at the corresponding 31 assessment periods which begin with 18 October to 17 November and end with 17 November to 16 December.
• Count the number of work paydays (assumed to be Fridays) in those 31 assessment periods. There are 12 assessment periods with five Fridays and 19 with four Fridays. 
• The proportion of assessment periods with five Fridays is 12/31 = 38.7%. With a total of 67,000 weekly paid Universal Credit claimants that gives the figure of 25,935 whose assessment period will have five paydays in it. 
• Using different paydays there are either 10 (Sunday, Monday, Tuesday),11 (Wednesday, Thursday, Saturday) or 12 (Friday) assessment periods with five paydays. Friday is the most common payday so I used Friday. Using other paydays the number of those affected is 21,613 for 10 and 23,774 for 11. Those results are not unexpected. With 67,000 weekly paid and each being affected one month in four a simple average gives 22,333 affected each month.
• The main assumptions are that weekly pay is constant and people are equally likely to apply on any day of the year.

The DWP now says 25,000 people had five weekly paydays in December. It cannot yet say how many will lose all and how many will some of their UC. The ones who lose it all will be those with UC payments that are relatively small.

Fiddly bits
There will be a very few people among those who have a 'work allowance' whose income from their job is so low that the extra week's pay will not reduce their Universal Credit.

People who lose all their UC payment in five week months but get some in four week months will end up over the year with more UC than if they were paid the same annual income but monthly. At lesat, they will if the make sure they reclaim the UC in time.

The DWP cannot at the moment say how many of those affected by the five week problem will lose all their Universal Credit and how many will lose only some of it.

The loss of Universal Credit in a month can affect entitlement to other benefits such as council tax support, free school meals, and free or cheaper NHS services. Some older NHS forms may not have a 'universal credit' box to tick to get the help even if it is available. If the DWP takes a third party deduction for rent arrears or other items these will also stop if there is no UC in a month to deduct it from.

In Scotland people in Full Service areas who claimed from 4 October 2017 can choose to be paid twice a month.

All employers do not pass the information on pay on to HMRC immediately and that can mean Universal Credit is - wrongly - assessed on reported income rather than income actually received.

Exemplars
Jane and Chris are exemplars, not real case studies. The numbers are rounded and may differ by a pound or two from the actual amounts they would get. All the figures have been checked with two or three sources. It is assumed that neither of them has savings or other income.

Jane and her erstwhile partner did not claim tax credits before he left her. Jane will also get Child Benefit and possibly maintenance from Zoe's father. Neither would affect her Universal Credit payment. Neither Chris nor Jane is entitled to help with their council tax - their incomes are too high.

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20 December 2017

GRENFELL TOWER - FINANCIAL HELP FOR SURVIVORS AND RELATIVES

THIS PAGE IS NO LONGER BEING UPDATED

Survivors of the fire in Grenfell Tower in Kensington lost everything except the clothes they slept in. They lost not just their clothes and possessions but also any cash they had and their bank cards. Any financial records such as insurance policies will also have been lost.

Banks
Access to your own money means establishing your ID. The banks all say they have procedures in place to enable customers with no documents to establish who they are. In some cases specialist staff will be available.

They will speed up the process of supplying debit cards. Barclays says it can do them on the same day and will take customers to a branch where that can be done.

The banks say emergency access to cash and if necessary overdrafts will be available to customers who need it.

Some banks will be opening local branches over the weekend.

Here are the bank helplines

Bank of Scotland 0345 721 3141

Barclays 0345 734 5345

Coop 03457 212212

Halifax 0345 720 3040

HSBC 03456 092527

Lloyds 0345 300 0000

Nationwide 0800 917 23 93

NatWest 0161 451 0217

Royal Bank of Scotland 0161 451 0218

Santander 0800 0156 382

Insurance
Residents who did have insurance  should contact their insurer. People who may not remember who the policy is with should check their bank statements to find who they paid. Insurers should act swiftly to provide cash and meet claims. They understand it will be difficult for residents who have lost all their documents in the fire.

Grants
At least one in four households have no insurance for their possessions. In areas where incomes are low the proportion is higher. So it is possible that half or more of the survivors have no cover for the losses they have incurred.

The funds raised for residents are being administered centrally by the Charities Commission. People should apply locally or call the Red Cross on 0800 458 9472.

Legal advice

Local residents who need or want legal advice can contact North Kensington Law Centre or call  020 8969 7473 or email info@nklc.co.uk

Government advice
There is a very comprehensive list of where to get help on the Government's support for people affected page. It includes benefits, physical injuries, exposure to smoke, mental health, psychological trauma, passports and immigration, driving licences, pets, and bereavement support. Also details of how to volunteer or give money.

THIS BLOG IS NO LONGER BEING UPDATED.

25 June 2017
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