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Cutting Universal Credit is ‘a recipe for disaster’ warns Citizens Advice

Tomorrow (6 October) the government is due to cut Universal Credit by £20 a week, affecting nearly six million people in England, Scotland and Wales.

Dame Clare Moriarty, Chief Executive of Citizens Advice, said:

“Cutting Universal Credit as we head into a very tough winter is a recipe for disaster.

“With household budgets already being squeezed from all sides, families on the lowest incomes simply cannot afford to lose £20 a week. 

“If the government is serious about ‘levelling up’ it must change course. Otherwise our frontline advisers could see many more facing desperate choices between heating and eating in the months ahead.”

Background information

Research by Citizens Advice shows:

  • More than a third of people on Universal Credit (38%) would be in debt after paying just their essential bills if their benefits drop by £20 a week.

  • 1.5 million working people on Universal Credit could be pushed into hardship this winter if the cut goes ahead. This includes falling behind on bills and needing to borrow from friends and family to get by.

    • Around one in four working claimants - equivalent to 600,000 people - are worried they might not be able to afford food or other basic necessities like toiletries.

  • Almost half (45%) of people earning less than £21,000 per year are worried they’ll struggle to pay their energy bills this winter.

  • The combined impact of a cut to Universal Credit, rising inflation and the loss of the Warm Home Discount when someone’s supplier fails could leave low income families £37.40-a-week worse off this winter.

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Universal Credit cut will leave 1.5 million workers in hardship, warns Citizens Advice
  • Cost of living crisis as rising energy bills compounded by loss of £20 a week 

Citizens Advice has warned that 1.5 million working people on Universal Credit could be pushed into hardship this winter if their benefits are cut by £20 a week. 

The charity is anticipating a surge in families seeking its support as rising energy prices and higher living costs are compounded by the cut to Universal Credit.

Its latest research shows two thirds (67%) of working claimants say they’ll face hardship if the cut goes ahead. This includes struggling to pay their bills, getting into debt or being forced to sell belongings to make up for the shortfall in their income.

Around one in four working claimants - equivalent to 600,000 people - are worried they might not be able to afford food or other basic necessities like toiletries. 

Citizens Advice says shop workers, nursery assistants and security guards are among those seeking its help because they’re worried about how they’ll manage over the winter. 

Many will struggle to make up for the loss of £20 a week 

Around 2.3 million Universal Credit claimants are already in work. A further 1.7 million are unable to work due to health or caring responsibilities.

Frontline staff at Citizens Advice say many people they’re supporting would struggle to make up the lost money by finding work or increasing their hours.

The taper rate - a reduction to your Universal Credit based on your earnings - means someone paying National Insurance and tax could have to work nine hours at the National Living Wage to make up for the cut.

“It’s our children that would suffer”

Oliver lives in Weymouth with his partner. He works three days a week in a restaurant and alternates working days with his partner so one of them can look after their school and nursery-aged children. Due to the cost of childcare, it would be a struggle for Oliver or his partner to increase their hours. 

“If we lost that extra £20 a week it’s our children that would suffer. We’d really struggle to pay for their school clothes, equipment and swimming lessons. 

“There's been a rise in the cost of things. Our food bill has gone up but our wages haven't gone up. I just don't understand why they’re taking away the money when things are already so hard.”

Dame Clare Moriarty, Chief Executive of Citizens Advice, said:

“With energy bills set to rise and family finances already stretched to the limit, this cut is coming at the worst possible time.

“Shop workers, nursery assistants and security guards are just some of the people on Universal Credit seeking our help because they’re already struggling to make ends meet. 

“The government has shown in this pandemic that it’s willing to support people through hard times. With a cost of living crisis underway, it must reverse the disastrous decision to cut this lifeline.”

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Citizens Advice urges government against Universal Credit cut as energy prices surge

Amid soaring energy prices, Citizens Advice is urging the government against a cut of £20-a-week to Universal Credit.

Dame Clare Moriarty, Chief Executive of Citizens Advice, said:

“This is a hugely unsettling time for millions of energy customers. It’s particularly worrying for many on the lowest incomes who’ll be facing the double whammy of rising fuel bills and a benefits cut.

“With choppy waters ahead, the single best thing the government can do is keep its lifeline of £20-a-week to Universal Credit.

“Ofgem must play its part and continue to provide support and protection - especially for those worried about their finances.

Background information

  • Citizens Advice has seen a surge in people viewing its energy advice pages. This weekend:

    • Its page on checking who has taken over your energy supply has just seen a 9000% increase in views from the previous weekend. 

    • Its page on what to do if your energy supplier has gone bust saw a 1700% increase in views from the previous weekend.

What should I do if my supplier has failed?

  • If you’re a customer of a failed supplier, Ofgem will move you onto a different one. This can take a few weeks, but your gas and electricity supply will continue in the meantime. 

  • Your new supplier will contact you and it’s good to be prepared beforehand. Take a note of meter readings, keep old energy bills and make a note of your account balance. 

  • Wait until your new supplier is appointed before cancelling any direct debits. This should all make the transition easier.

  • You can find more information on the Citizens Advice website.

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Citizens Advice: Seven things to check if you’re at risk of redundancy

With the furlough scheme due to end on 30 September, Citizens Advice has set out your essential checklist if you’re facing redundancy.

The charity’s frontline advisers have supported nearly 45,000 people with redundancy issues since the pandemic began - equivalent to one person every four minutes.

Matthew Bradbury, Senior Employment Expert at Citizens Advice, said:

“If you’re at risk of redundancy, it’s important to know you do have rights to help protect you from unfair dismissal and to ensure you’re paid what you’re owed.

“It’s completely understandable that you may find the rules and procedures overwhelming, but you don’t have to face redundancy alone. If you’re struggling, check our website or contact your nearest Citizens Advice for help.”

The charity has set out the seven things anyone at risk of redundancy should check:

  1. Check if your redundancy is fair. There are rules to protect you from being discriminated against, and from being picked for redundancy due to an unfair reason. For example, although you can be made redundant while pregnant or on maternity leave, if this is the reason for doing so, it counts as automatic unfair dismissal and discrimination. Other examples of unfair reasons for choosing someone for redundancy include being picked because you work part-time or you made a complaint about health and safety. See Check if your redundancy is fair for more information.
  2. Check how much redundancy pay you get. You’re entitled to at least ‘statutory’ redundancy pay if you’ve been an employee for two years or more. The amount you will get depends on your age and how long you have worked for the company. Some employers make enhanced contractual redundancy payments on top of the statutory amount.
  3. Furloughed? Make sure you get 100% redundancy pay. If you are made redundant while furloughed, your redundancy pay should be based on your normal wage and not the 80% that you’ve been getting during furlough.
  4. Check your notice period. If you’ve worked for your employer for at least a month you’re entitled to paid notice that you’re being made redundant. After one month in the job, you must be given one week’s notice, rising to two weeks after two years service, and then a further week per year unemployment up to a maximum of 12 weeks. You may be entitled to a longer notice period as part of your employment contract. Your notice period only starts when your employer confirms that you’re going to be made redundant and not when you’re only at risk of redundancy. Your employer might decide to give you notice pay instead of making you work your notice period - this is called ‘pay in lieu of notice’.
  5. Check your holiday pay. You’ll be paid for any statutory holiday you have left over when you leave. This should be at your normal pay rate, even if you’re currently furloughed on 80% of your pay. Your employer can tell you to take any remaining holiday during your notice period as long as they give you the right notice (two times the length of the holiday they want you to take).
  6. You might be entitled to paid time off to look for work. If you will have worked for your employer for at least two years by the end of your notice period, you’re entitled to ‘reasonable’ time off to apply for jobs or go on training. You can take the time off at any time in normal working hours and your employer can’t ask you to rearrange your work hours to make up the time off. When taking time off to look for work, you’ll be paid at your normal hourly rate, but only for up to 40% of the time you take off  - for instance for up to two days if you work a five-day week. The rest will be unpaid. See preparing for after redundancy for more information.
  7. Check if you’ve got legal help via your home insurance. Often people get 'legal expenses cover' as part of their home insurance package, but many don't realise they can get free legal help to challenge their redundancy if they think it’s discriminatory or unfair. It’s worth checking the terms and conditions and speaking to your insurer. If you have a trade union at work, you could also contact them. Your union can help you work out if you’ve got a claim, and support you through the process, for example by going to meetings with you or negotiating on your behalf.
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