Financial help for the unemployed in the United Kingdom

Having dealt with the issue of the tax breaks that are available to those working from home (thanks for the comments, votes, feedback and correction), I thought I would turn my attention to those who have not been able to find work. As you know (unless you have been hiding in a cave in the middle of mountain somewhere . . . then good for you, I could do with a vacation myself), there has been a global and economic slowdown. Businesses have failed, shops have closed, houses repossessed, jobs have been lost and livelihoods destroyed. People are saving more than ever, reevaluating more than ever, and searching more than ever. They are looking for reasons, looking for answers but they are mostly looking for jobs. 

It seems that those are getting harder to come by.  Companies (such as British Telecom) are closing their graduate schemes, businesses are laying people off (some with no redundancy pay) and independent contractors and freelancers are finding work very hard to come by. With all this going on, the welfare system has been called into action like never before. This is certainly the case in the United Kingdom. Unemployment (as of August 2009) is at 2.44 million, the highest that it has been since 1995. The number of people on unemployment benefits has risen by almost 25,000 to just under 1.6 million. So what help is there for those have lost their jobs?  What assistance is there for those who are looking for jobs? What about with special concerns such as the elderly, the disabled, the very young and the self-employed who cannot find work? This article is going to deal with this topic. The facts and figures here are based on current facts and figures and are subject to change, so please seek advice and do the necessary research before making any decisions.

Job Seekers Allowance (JSA)

Formerly known as unemployment benefits, this is the main source of funding for those who are unemployed. In order to qualify, you have to be under pensionable age (in the United Kingdom, this is 65 years old for men and 60 years old for women), be actively seeking work and be either not working or working no more than 16 hours a week. This is not paid to anyone under the age of 16 or 17 unless there are extenuating circumstances. JSA is paid every 2 weeks directly into a bank account. There are two types of JSA - contribution-based and income-based.

Contribution-based JSA - this depends on how much National Insurance Contributions (NICs) you have paid in the last two years. It is payable for up to six months. If you apply for this, then your savings and income will not be considered. If you were in your last job for two years and working full time, then you can get this for the full six months, if you have been working part time, then you will receive it for less time. The amount paid is dependent on how old you are. If you are aged between 16-24, then you will receive £50.95 a week and if you are over 25, you get £64.30.

Income-based JSA - as the name suggests, this is based on what income or savings you have (you will get paid less if you have savings of more than £6,000 and if you have more than £16,000 you won’t get anything) and is paid until you find work. It is for those who have not made any NICs payments. If you or your partner work more than 24 hours, then you will be ineligible to receive this. If you or your partner works less than this, then you will get much less.

Age

How is this claimed?  Well, you can get the ball rolling by applying online or by phone. When you start your claim, you have to attend an interview at the Jobcentre. This is known as a new jobseeker interview. At this interview, you will have to sign a jobseeker’s agreement. This lays out the conditions for receiving your benefits - one of the key pillars behind this agreement is that you must show evidence that you have been trying to find work and how you are trying to do so. In order to keep receiving JSA, you will have to attend fortnightly reviews. If you have been receiving it for more than 13 weeks, then the reviews will be longer. If you do not agree with any decision with regards to JSA, you can appeal; and you must report any change in your circumstances.

Income Support

This is another benefit and it is for those who are not working or are on a very low income. The people who are eligible for this are those who are unable to work because they are disabled, caring for someone full-time or are single parents. It is also available to those who are on Maternity or Paternity leave, those who are off sick; and Income Support pays more than Statutory Sick Pay. You cannot receive this if you work more than 16 hours a week or if your partner works more than 24 hours a week.

How much you get is dependent on several factors:

• Whether you are single or in a couple
• If you are disabled or ill
• What savings you or your partner have
• If you have dependents
• If you are a caregiver

It is paid either directly into a bank account or by cheque fortnightly (as of April 2009). If you receive this, then you automatically qualify for:

• Free dental and medical care
• Free school meals

• Housing Benefit - if you need financial help and are on a low income, then you can apply for this to help you pay for any ‘eligible rent.’ This means that only your rent costs will be covered. If it includes any utilities, these will NOT be covered. You cannot get this if you have savings of over £16k (unless you are 60+ and are receiving Pension Credit), live in the home of a relative, are an asylum-seeker or a student (unless you are disabled or have children). If you live with a partner, only one of you can get this. If you are under 25, you can only get this for the one room that’s yours in shared accommodations. The council will look at your circumstances and savings to see what you are due. If you are living in council accommodation, it is paid directly to the rent account; if you are a private tenant, then you can choose whether to have it paid by cheque, into the landlord’s account or into your own account. You can claim in advance (although you won’t get paid till you move in ) and can backdate any claim (but you should receive advice on this)
• Council Tax Benefit - if you pay Council Tax and you have an income under a certain amount, you can apply for this. You can apply for this whether you rent or own your home or live without paying rent. There is an element called Second Adult Rebate (SAR) if you share your home with someone who is not your partner, is over 18, on a low income, is not paying rent or Council Tax.

You may be able to get Second Adult Rebate even if you don’t receive Council Tax Benefit. But you must only be entitled to benefits which would cover 25 per cent or less of your Council Tax and/or not be entitled to Council Tax Benefit. Asylum-seekers are not eligible to receive this. A decision will be based on your circumstances, savings and income. This does not affect other benefits received. This will help reduce your Council Tax bill from 7.5% (If the second adult’s gross weekly income is between £175.00 to £227.99) to 100%. Your council will advise on this.

For those who are disabled or ill

If you are ill or disabled, then you are eligible for Employment and Support Allowance (formerly Incapacity Benefit and income support due to illness). This came into force in October 2008. If you are still receiving Incapacity Benefit, then you will continue to do so as long as you are eligible.

You will get help to see what you can you are capable of achieving despite your illness or disability. There are two phases:

The assessment phase takes place in the first 13 weeks (a medical assessment will be made), while your claim is being looked at with regard your ability to work. During this phase you must:

• Attend a Work-related Activity Group and participate in work-focused interviews with your adviser or
• Attend a Support Group which is for those whose illness/disability is so severe, they cannot be expected to work

The main phase which starts on Week 14 which will demonstrate that the disability/illness does limit the work you can do

Eligibility

You can apply for this if:

• You cannot get Statutory Sick Pay (it has ended or you cannot get it)
• You are employed or self-employed
• You are under pensionable age
• You have been receiving Maternity Pay but have an illness/disability which stops you from returning

You must also:

• Be getting special medical treatment
• Be unable to work on two or more days out of seven consecutive days
• Have an illness/disability which stops you working for 4 days out of 7

There are also special regulations if you are aged between 16 and 20. Again this allowance is divided into two plans, contributions-based and income-based.

So what if I was self-employed and had no work?

Well, as you are unemployed, then you may be eligible for Job Seeker’s Allowance. There are two elements to determining your level of support. First, the NICs will be looked at closely. Being self-employed and paying Class 2 contributions, you would not be entitled to contribution-based JSA. This requires recent contributions of Class 1 NICs. To learn more about these, click on this link http://www.hmrc.gov.uk/nic/background-nic.htm. But fear not, you could claim income-based JSA, because it is based on what you make and is dependent on level of savings and details of any dependents. If you have savings of more than £16,000, you will not be able to receive income-based JSA.

In order to receive JSA, you MUST actively seek work and be available to work. You have to keep records of what you did to find work as this may be asked for from time to time. If things start to pick up, inform the Job Centre immediately.

Times are hard and people are out there that need help. This is what this was designed for. Of course, there are those who would want to defraud the system. Keep on the lookout for them and let money not go to waste that could be used to give someone a little bit of a financial leg-up, especially if they are vulnerable. Let us hope and pray that lessons have been learned that will stand everyone in good stead when the recovery happens.

Hopefully, to broaden the scope of sharing this type of information, others will respond with information on aid programs available in their locales, as "comments" to this article.

Take care and God bless readers . . . .

08.31.09