Universal Woe

Well here we are. I guess most of us now will be in areas where universal credit now applies to all new claims. If you think that won’t affect you or your clients because, whether you are a mediator or lawyer, your clients are all privately paying, think again. That is unless of course all your clients are so wealthy that they won’t ever need to know what tax credits are. The reality is that for many middle income couples, tax credits have made possible OK lives for two households. When a main earner on £80,000 a year is going to be taking home roughly  about £3,800 a month, it’s a stretch without that helping hand. It can make all the difference.

Let’s not even start to think about previous clients with financial arrangements and court orders going back years who will be affected once the transitional provisions come in and their tax credits start to be assessed under the new universal credit regime. Let’s focus on the newbies, the ones seeing us for the first time whose claims will be dealt with under the universal credit rules. First of all the assessments may well be less generous. The big change however is that spousal maintenance will start to be taken into account as income. I’ve in fact wondered for years when a government would catch up on that omission.

That may well seem fair when the maintenance package runs into four figures but tax credit assessments ignored all maintenance payments. There are many more people whom I see in mediation who will be affected. The payer may well have no issue about the total amount of maintenance deemed necessary every month. However we mediators and lawyers have to consider what a child maintenance service assessment would be. If the necessary, indeed agreed, amount of maintenance, exceeds that figure, we mediators and lawyers have to explain about the need to keep spousal maintenance as a safety net in case there is a CMS assessment 12 months after the order. In some cases we end up with actual defined amounts for child and spousal maintenance. In some cases it’s global maintenance.

The problem is that, for what were essential tax credits, universal credit will take account of what is paid to the spouse. That’s fine with a safety net nominal maintenance provision until and if that turns itself into a substantive amount. What however about global maintenance? Unless there is some attempt to define its constituent parts, that can be grossly unfair to the payer. Unless all the maintenance stops for example when children leave school, it means the whole lot goes on being payable to the spouse. What’s more immediately pertinent is that it seems unlikely to me that those assessing entitlement to universal credit will accept that all that global maintenance is payable for children only. Why after all would they given the order clearly states that the maintenance is for spouse and children? If they adopt an extreme position, the total amount paid could altogether debar a successful claim.

I don’t pretend to have the answers. I do know however that it’s essential that we mediators and lawyers factor the altered landscape of universal credit into the equation when working with couples. It may well change the discussion around maintenance.

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