Why Universal Credit migration could threaten farming finances

19 June 2024

Universal Credit sign

Photograph: Jim O Donnell / Alamy Stock Photo

The migration from Working Tax Credits to Universal Credit has left some farming families concerned over the potential loss of this vital safety net. 

The NFU has previously pressed the DWP (Department for Work and Pensions) to resolve problems with the UC (Universal Credit) regime that threatens to leave significant holes in the finances of some farming families.

Increasing feedback from NFU members suggests some self-employed claimants in the sector are falling through gaps in what is supposed to be a vital safety net, because there is little in the new system to account for the seasonal nature of farm business income.

They are among the last to switch to UC – the one-stop shop replacement for a range of benefits – and the DWP hopes to complete their migration by the end of the year. But as the migration picks up pace, so have reports of problems.

What’s the issue?

Under the previous benefits arrangements, income was calculated on a yearly average.

The new UC regime, meanwhile, is based on monthly earnings, meaning farmers subject to seasonal income fluctuations might qualify for payments in some months, but not others.

To compound problems, UC’s ‘minimum income floor’ presumes everyone has earned the equivalent of the National Living Wage each month, impacting the extent of eligibility in ‘lean’ months across the farming sectors, where incomes may effectively be zero.

Many of those navigating the switch to date have also found the reporting requirements challenging.

They’re trying every single day to stand up on their own two feet. But every now and again you just need a little bit of help in life.”

NFU Vice President Rachel Hallos

‘I don’t know how to explain it any more’

Speaking on BBC Countryfile at the start of June, NFU Vice President Rachel Hallos explained how this has been impacting members: “I had one member who turned around and said ‘I’ve explained to them we lamb our sheep in spring and we don’t sell them until autumn so therefore we don’t have any income until autumn and I don’t know how to explain it any more, and I’ve tried really hard but they don’t seem to understand’.”

When asked how farmers had been received at job centres, Rachel said they’d heard “all sorts”, from “your business isn’t viable you know, or are you sure you’re actually working, or why don’t you get another job?”.

She added: “There’s a fabric of family farming around this country and to maintain that fabric, we need to keep the families on those farms and to turn around and say that all these small farms are not viable would put a huge strain on the food supply chain.

“They’re trying every single day to stand up on their own two feet. But every now and again you just need a little bit of help in life.”

Rachel said the NFU will pick this up again with the next government when parliament resumes after the general election.

How UC falls short for farmers

As part its evidence to government in 2018, the NFU included the following costed example.

  • A claimant with a gross income of £13,650, but working as a paid employee and therefore getting a regular monthly income, would be eligible for a monthly UC payment of £895, taking their annual net income to £23,296 (after tax and National Insurance Contributions).
  • However, a farmer with the same level of gross earnings (£13,650/year) might only be eligible for UC in eight out of 12 months because of their fluctuating cashflow and would not be eligible for the full amount in some of those months. As a result, their total annual net income would only be £18,089 – a shortfall of more than £5,200 compared with the employee earning a regular wage.

Government was warned

The NFU has consistently raised the potential for problems caused by the rigid criteria of UC, since the scheme to replace a range of benefits with one payment was in its design stage.

It is highlighting emerging issues – and urging affected members to get in touch to help build the strongest evidence base for changes.

Speaking after a DWP meeting earlier in the year, NFU Director of Strategy, Nick von Westenholz, said that farmers must not be left worse off than others with the same annual earnings, simply because of their cashflow.

“While it was encouraging to hear that the DWP recognises potential problems with the migration for some farmers and growers, and wants to work with us to find solutions, policy fixes won’t be straightforward,” he said. “We’re continuing to discuss adjustments DWP can introduce to ensure farming claimants aren’t left out of pocket, but it’s also important that members take action on any correspondence they receive on UC to make sure they can still receive support.”

Switching to UC? Why you need to engage

NFU Head of Taxation Michael Parker echoed that, stressing that farmers who receive a letter about the switch should respond by the stated deadline to ensure they get important safeguards.

These include transitional support and the removal of the minimum income floor during the first 12 months. The DWP will issue a reminder and even those who miss the deadline may be eligible for safeguards, if they respond as soon as possible.

“The NFU has previously raised a range of concerns over the impact for farmers of moving to UC,” Michael said. “We are aware that some of these now seem to be arising as they are migrated from tax credits.

“We have previously had some positive engagement with the DWP and are seeking solutions. We will look to continue these conversations with the next government following the general election.

“However, it is important that members do engage with the migration in the meantime, and continue to let us know of any issues they encounter so that we can raise actual examples with the DWP.”

Get in touch

If you've been affected you can contact NFU CallFirst on 0370 845 8458 or email Michael at [email protected] for support. Issues raised will help support our discussions with the next government and will be kept anonymised. 

A new DWP website may also provide further information. 

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