CLERGY who are experiencing financial hardship as a result of the shift from child tax credits to Universal Credit may need help from their diocese, backed by “targeted support” from the national church institutions, the Bishop of Hereford, the Rt Revd Richard Jackson, who chairs the Remuneration and Conditions of Service Committee (RACSC), said this week.
The statement was made amid concern in clergy households about loss of income. A crucial change in the conditions for Universal Credit is that having capital worth more than £16,000 renders a household ineligible for Universal Credit. The rule raises questions about the feasibility of clergy households’ saving for a home in retirement — something that the Pensions Board is encouraging amid changes to its provision of housing (News, 13 October 2023).
“The changes from child tax credits to Universal Credit are a matter of concern,” Bishop Jackson said on Tuesday. “We are surveying the dioceses to help us to have a clearer understanding of their capacity to respond to individual clergy financial hardship. It will also help us to consider whether there are some dioceses which need targeted support to enable them to respond to the needs of clergy experiencing particular financial hardship.”
Universal Credit was first introduced in 2013 (News, 1 March 2013). It replaces six “legacy” benefits: income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Income Support, Working Tax Credit, Child Tax Credit, and Housing Benefit. A single monthly payment is made to a household’s bank account, with the amount responsive to earnings.
In recent years, a process of “managed migration” has been under way, in which claimants of any of the six legacy benefits are being moved to Universal Credit. The Department for Work and Pensions is sending Universal Credit Migration Notices in the post. Everyone currently receiving child tax credits will be transferred to Universal Credit by the end of 2024.
The Government estimates that more than half of the current claimants will be better off. For those who will be worse off, “transitional protection” is in place. For those on tax credits with more than £16,000 in money, savings, and investments, Universal Credit will be paid for up to one year, under “transitional capital disregard”.
Among the benefits claimed by clergy households are child tax credits: a benefit available to families earning below a certain threshold and increasing with the number of children in the household. They can add thousands of pounds to a household’s yearly income. Since the introduction of the benefit in 2003, many clergy households have been eligible: a survey of more than 3700 clergy carried out for the 2021 Clergy Remuneration Review found that one third of the clergy reported having a household income of between £20,000 to £30,000 (News, 24 June 2021).
The £16,000 capital cap is likely to affect many clergy households that, living in tied accommodation, have been encouraged to save enough to buy a property to live in after retirement. A key message of the Pensions Board’s recent consultation on retirement housing is “sparking planning ahead and encouraging saving, with regular conversations, support, and services throughout ministry”.
A spokesperson for the Department for Work and Pensions said: “It is right that people use their substantial savings to help support themselves, so that we can protect those most in need and deliver fairness for the taxpayer.”
This week, clergy spoke about the impact of the shift on their families’ finances.
The Priest-in-Charge of St Mark’s, Shiremoor, in the diocese of Newcastle, the Revd Dr Rachel Caro, has calculated that her family will lose £8360 a year in tax credits in the migration to Universal Credit. Two days after the birth of her second child, her husband had genetic tests that revealed that he had a form of muscular dystrophy. His condition has since deteriorated significantly, and he is unable to work. There are many costs associated with his disability, including a wheelchair, physiotherapy, heating, and help with cleaning and childcare.
At the time of his diagnosis, her husband was a full-time carer for their two small children (a decision taken because, as an ordinand, Dr Caro wasn’t eligible for maternity pay), and so was unable to apply for Employment Support Allowance. But he was assessed as eligible for the higher rate of Personal Independence Payment. The family has also been receiving child tax credits for their two children, aged seven and five.
In September, she received a letter informing her of the migration to Universal Credit, and learned that, because the family has more than £16,000 in savings, it will be ineligible for Universal Credit. The Caros had been saving for their retirement. Dr Caro is 36, and anxious to ensure that she will have enough to buy a property, conscious that her husband’s condition is genetic, and that she may be caring for both him and her children.
“I don’t think it’s unreasonable to not want to be homeless while caring for severely disabled people,” she said this week. While full of gratitude for the Clergy Support Trust, which had “gone above and beyond”, and the support of her diocese, family, and friends, she did not believe that charitable support could cover the loss of more than £8000 in benefits. “We didn’t plan for it to be like this,” she said. “I thought we were going to have two incomes.”
She is aware of others in her circle who are also extremely anxious about the coming changes. “It’s absolutely desperate,” she said. “I was told very early on, when I was an ordinand, that our stipend is not loads, but enough for you to live on without having to worry. Yet I spend all of my time worrying. I love my ministry, I feel so called to it, and the idea that I might have to leave over money just seems so wrong.”
The Team Rector of Thurstable and Winstree, the Revd Anne-Marie Renshaw, is a single parent of two teenagers, one of whom is still at home. She had been receiving about £300 a month in child tax credits, but received a Migration Notice in October. She is not eligible for Universal Credit, because of savings gained from the sale of the flat that she and her husband owned. It was sold as part of the financial settlement of their divorce. “It won’t be enough to buy retirement housing, but it’s something,” she said.
“I understand the Government thinks that you should use savings, but it’s a really strong disincentive for low-income families to save.” The family lived in a large rectory, and the spike in energy costs had hit her hard, and she had had to draw on savings, she said.
The transitional protection provided by the State amounted to just £35 a month, while the application process had been “horrible”: the form had no section for clergy expenses or benefits in kind, and the attitude of those administering it seemed to be that applicants were “stupid, or out to defraud the system”. Even the Jobcentre adviser had sat “at nose height” at a higher desk.
Ms Renshaw runs a foodbank as part of her ministry, and said that her own experience was further evidence of the “belittling and demeaning” experience of claimants. There was also a conversation to be had “about whether it is right that the stipend is so low that clergy families without a second income are eligible for state benefit,,” she said. The impact of the recent payroll error that delayed the payment of stipends had also highlighted the state of many clergy household finances (News, 31 January).
Universal Credit was initially welcomed by charities, including the Joseph Rowntree Foundation. But, since its introduction more than a decade ago — and amid deviations from the original design — it has been the subject of concern and criticism. Bishops have been among those urging the Government to fix its flaws (News, 10 November 2017; 19 October 2018). The sanctions system (News, 15 November 2013), the five-week wait for the first payment (News, 27 October 2017), and the two-child limit (News, 6 April 2018) have all been criticised.
This week, the Church Times heard from Sarah (not her real name), a single parent of three children who works part-time, and who was divorced from her clergy husband some years ago. Having received both Child Tax Credit and Working Tax Credit, she was moved to Universal Credit in 2021 after leaving a job. Not receiving the first payment for six weeks — a much criticised element of the benefit — was “hard”, she recalled.
Although she was able to borrow from future payments, the repayments “hung over” her for a long period of time. She was also critical of “punitive” aspects, including pressure to take any job available, regardless of previous experience or qualifications, and a disincentive to accept overtime because of the net loss in income due to a reduction in benefits paid.
She questioned the rationale for the design of the benefit, which appeared “callous”.
“They think they are encouraging people to use foresight and look ahead, but when you are skint it just doesn’t work that way,” she said. “When you are under pressure it makes you physically ill. . . They don’t have any understanding of that kind of life.”
Bishop Jackson’s comments this week follow two central injections of funding to help clergy and lay workers struggling with the cost-of-living crisis, in 2022 (News, 13 May; News, 14 October 2022).
The 2021 remuneration review, which Dr Jackson led, was informed by a survey of more than 3700 clergy. The clergy more likely to report that they were finding it difficult to manage financially were those who had two or more children and no additional household income.
Professor Donald Hirsch, of the University of Loughborough, who devised a Minimum Income Standard, advised the review that “for some larger families, the stipend alone does not produce sufficient income, in combination with tax credit entitlements, to afford a minimum budget.”
He also warned that “an important factor to take into account when considering the role of the stipend in providing adequate family incomes is the changing role of tax credits and Universal Credit in topping up the income of families whose wages may not be sufficient to meet their needs. . . This consideration is especially important to those clergy families where the stipend does least on its own to meet minimum needs: those with three or more children.”
This week, the chief executive of the Clergy Support Trust, the Revd Ben Cahill-Nicholls, said that some clergy households had reported that they would be “several hundred pounds worse off” owing to the shift, “at a time when the Trust is already seeing a huge increase in clergy families relying on our grants to simply get by”.
It supported 22 per cent of the clergy last year, and the households that received grants included 3500 children in total. During the year, there was a 50-per-cent rise in grant applications to cover “essentials”, including food bills, school shoes, and warm clothing, to a total of £870,000.