Lift the benefit cap only for the support component and the people HB reg 75F and UC reg 83 name, and cap only the family's benefits

changelog.d/benefit-cap-75f-claimant-partner.added.md

@@ -0,0 +1,3 @@
+- Add `esa_includes_support_component`: whether a person's employment and support allowance includes the support component. Datasets and users can supply it; otherwise it is assumed for anyone with an ESA award of their own. Household calculations with ESA outside the support group should set it to false.
+- Add `has_own_esa_award`: whether a person claims ESA themselves (a reported award, or a directly entered income-related award attributed to the claimant who heads the benefit unit).
+- Add `uc_limited_capability_for_work`: limited capability for work, for the Universal Credit work allowance, reduced minimum age, work preparation group and the partner's exception to the childcare work condition.

changelog.d/benefit-cap-75f-claimant-partner.fixed.md

@@ -0,0 +1,6 @@
+- Lift the benefit cap for employment and support allowance only where the claimant's or partner's allowance includes the support component (HB Regs 2006 reg 75F(1)(a); UC Regs 2013 reg 83(1)(a)), for contributory and income-related ESA alike. Any income-related ESA, and any member's contributory ESA, used to lift it. Without other information the support component is assumed for a person with their own allowance, as for about nine in ten ESA recipients in the Family Resources Survey.
+- Lift the benefit cap for a disability or carer benefit only when the person the regulations name receives it: the claimant or partner for attendance allowance, industrial injuries benefit and armed forces compensation; also a child or young person they are responsible for, for disability living allowance; also a young person, for personal independence payment, Carer's Allowance and Carer Support Payment, and a Housing Benefit young person for armed forces independence payment. A 16-year-old who receives benefits in their own right or is looked after is not a young person here. The Universal Credit LCWRA and carer exceptions now need a claimant with limited capability or caring responsibilities, or an element entered directly, which lifts the cap whatever the members' circumstances. A partner who cannot be a joint claimant (UC Regs 2013 reg 3(3)) lifts no cap with their own benefits. For a family on Universal Credit the claimant and partner are the award's claimants (`is_uc_assessed_claimant`), otherwise Housing Benefit's claimant and partner; the two are the same unless `is_uc_claimant` is entered. A non-dependent adult's disability and carer benefits, ESA, disability flag and caring no longer lift the family's cap.
+- Count armed forces independence payment towards the benefit cap exception.
+- Take a person whose own ESA lacks the support component not to have limited capability for work-related activity (`uc_limited_capability_for_WRA`), whatever their disability flag, since that determination is what gives ESA the support component and Universal Credit takes it (UC Regs 2013 reg 40(1)(a)(ii)). Datasets flag every ESA recipient as disabled and the support component is assumed, so this changes nothing in the data until a dataset reports the ESA group.
+- Give the Universal Credit work allowance and reduced minimum age their own limited capability for work test (`uc_limited_capability_for_work`, UC Regs 2013 regs 8(1)(a), 22, 39): limited capability for work-related activity or the disability flag, so an ESA recipient outside the support group keeps both. The work preparation group (Welfare Reform Act 2012 s.21(1)(a)) and the partner's exception to the childcare work condition (UC Regs 2013 reg 32(1)(b)(i)) read it too, so a claimant flagged as disabled without limited capability for work-related activity is in the work preparation group, outside the minimum income floor, and as a partner still lets a working claimant meet the childcare work condition.
+- Count in the benefit cap only the welfare benefits the claimant or couple is entitled to (UC Regs 2013 reg 80(1); HB Regs 2006 reg 75A): the claimant's and partner's contributory ESA, JSA, incapacity benefit and SDA, their income-related ESA and income-based JSA (`claimant_or_partner_esa_income`, `claimant_or_partner_jsa_income`), and the family's Child Benefit, CTC, Income Support, Universal Credit and Housing Benefit. For a family on Universal Credit the couple is the award's claimants, including the other member of a couple where one member claims as a single person (UC Regs 2013 reg 78(2)); otherwise it is the claimant and partner. Another member's own award no longer reduces the family's Universal Credit or Housing Benefit; it still counts in household income.

changelog.d/benefit-cap-75f-claimant-partner.removed.md

@@ -0,0 +1,2 @@
+- Remove the unused benefit sums from `is_benefit_cap_exempt_earnings` and `is_benefit_cap_exempt_other`; the earnings and age exceptions keep their results and the armed forces and ESA exceptions move, limited to the claimant and partner, into `is_benefit_cap_exempt_health_disability`.
+- Remove the input `uc_has_limited_capability_for_work`. The work preparation group reads `uc_limited_capability_for_work`, which datasets and users can set instead.

docs/book/programs/gov/dwp/universal-credit.ipynb

@@ -44,7 +44,7 @@
   {
    "cell_type": "markdown",
    "metadata": {},
-   "source": "## How PolicyEngine computes Universal Credit\n\nPolicyEngine computes Universal Credit at the benefit-unit level in three stages:\n\n1. **Maximum entitlement** (`uc_maximum_amount`): sum the elements the benunit qualifies for — `uc_standard_allowance`, `uc_child_element`, `uc_disability_elements`, `uc_carer_element`, `uc_housing_costs_element`, and `uc_childcare_element`.\n2. **Means test**: only the claimants' income counts: the single claimant, or the two joint claimants (`is_uc_assessed_claimant`; UC Regulations 2013 reg 22(1)). The earnings and unearned income of a child, a qualifying young person or anyone else in the benefit unit are theirs, not the claimant's, so the Universal Credit means test does not count them. Who the claimants are comes from `is_uc_claimant` (the claimant and partner); a member flagged there is taken as a claimant whatever their age. Each person's earnings (`uc_individual_earned_income`) are net of their own relievable pension contributions and the income tax and National Insurance they pay on that employment or self-employment (UC Regulations 2013 regs 55(5) and 57(2)): `uc_income_tax_on_earnings` treats earnings as the lowest slice of the person's non-savings income, so tax on pensions, property, savings and dividends is never deducted, and one partner's tax never reduces the other's earnings. A claimant in gainful self-employment outside a start-up period who would otherwise be subject to all work-related requirements is subject to the minimum income floor (reg 62): when their earnings after those deductions are below `uc_minimum_income_floor`, they are treated as having that amount instead. The floor does not apply to a claimant in the no work-related requirements, work-focused interview or work preparation group (`uc_work_related_group_apart_from_earnings`; Welfare Reform Act 2012 ss 19 to 21): for example one with limited capability for work-related activity, a carer, a claimant over State Pension Credit qualifying age, or the responsible carer of a child under 3. Only one member of a couple is the responsible carer (`uc_is_responsible_carer`); where the nomination is not supplied the model takes the claimant who works fewer hours (`hours_worked`), then the elder. `hours_worked` defaults to 0, so for a couple entered without hours the default falls to the elder; supply `uc_is_responsible_carer` where the nomination is known. The floor is the minimum wage for their age for their expected hours (`uc_expected_hours`: 35 a week, or for the responsible carer of a child under 13 the hours DWP uses: 30 from February 2025, from April 2017 until then 16 for a child under compulsory school age and 25 for an older child, and 25 for any child under 13 before April 2017; regs 88 and 90(2)), less the income tax and the Class 2 and Class 4 National Insurance a self-employed person would pay on it (reg 62(4)(b) leaves this amount to the Secretary of State; this is the basis of DWP's guidance and figures, and setting the `gov.dwp.universal_credit.means_test.minimum_income_floor.self_employed_national_insurance` parameter to false deducts primary Class 1 instead). A member of a couple is lifted only while the couple's combined earnings are below the couple threshold, and never above it (reg 62(3)). The couple threshold is the sum of both partners' thresholds (reg 90(3)): 16 hours for a partner in the work-focused interview or work preparation group, nothing for a partner with no work-related requirements for a reason other than earnings, and 35 hours at the national living wage (the adult rate before April 2016) for a partner who cannot be a joint claimant (reg 90(3)(b)). The maximum entitlement is then reduced by 55% (the `gov.dwp.universal_credit.means_test.reduction_rate` parameter) of the claimants' combined earnings above the work allowance (`uc_work_allowance`), and by all of the claimants' unearned income (`uc_unearned_income`), pound for pound. Unearned income is the list in `gov.dwp.universal_credit.means_test.income_definitions.unearned`: retirement pension income (State Pension and private pensions, UC Regulations 2013 regs 66(1)(a) and 67), Carer's Allowance, carer support payment (up to the Carer's Allowance rate, from November 2023), contribution-based JSA and ESA, maternity allowance, industrial injuries benefit, and the tariff income deemed from capital (reg 72). Actual savings interest, dividends and ordinary rental income are excluded from UC unearned income at every capital level; capital counts through its tariff income instead. Asset rules apply on top of this — capital above the lower threshold deems a tariff income, and capital above the upper threshold disqualifies the benunit entirely.\n3. **Benefit cap**: the post-means-test award (`universal_credit_pre_benefit_cap`) is finally reduced by `benefit_cap_reduction` to produce `universal_credit`. The benefit cap only applies to benunits without a benefit-cap exemption (the claimants earning enough, having a qualifying disability benefit, etc.). The earnings exception reads the claimants' earnings only (reg 82(1)(a)), the capped total counts only the claimants' own contributory benefits (WRA 2012 s.96(1)), and the childcare work condition tests only the claimants (reg 32(1)).\n\nThe take-up step is handled by the input variable `would_claim_uc`, which is populated stochastically when the dataset is built so that PolicyEngine's caseload aggregates match published DWP claimant numbers rather than the full eligible population.\n\nParameters live in `policyengine_uk/parameters/gov/dwp/universal_credit/` and the per-element formulas in `policyengine_uk/variables/gov/dwp/universal_credit/`."
+   "source": "## How PolicyEngine computes Universal Credit\n\nPolicyEngine computes Universal Credit at the benefit-unit level in three stages:\n\n1. **Maximum entitlement** (`uc_maximum_amount`): sum the elements the benunit qualifies for — `uc_standard_allowance`, `uc_child_element`, `uc_disability_elements`, `uc_carer_element`, `uc_housing_costs_element`, and `uc_childcare_element`.\n2. **Means test**: only the claimants' income counts: the single claimant, or the two joint claimants (`is_uc_assessed_claimant`; UC Regulations 2013 reg 22(1)). The earnings and unearned income of a child, a qualifying young person or anyone else in the benefit unit are theirs, not the claimant's, so the Universal Credit means test does not count them. Who the claimants are comes from `is_uc_claimant` (the claimant and partner); a member flagged there is taken as a claimant whatever their age. Each person's earnings (`uc_individual_earned_income`) are net of their own relievable pension contributions and the income tax and National Insurance they pay on that employment or self-employment (UC Regulations 2013 regs 55(5) and 57(2)): `uc_income_tax_on_earnings` treats earnings as the lowest slice of the person's non-savings income, so tax on pensions, property, savings and dividends is never deducted, and one partner's tax never reduces the other's earnings. A claimant in gainful self-employment outside a start-up period who would otherwise be subject to all work-related requirements is subject to the minimum income floor (reg 62): when their earnings after those deductions are below `uc_minimum_income_floor`, they are treated as having that amount instead. The floor does not apply to a claimant in the no work-related requirements, work-focused interview or work preparation group (`uc_work_related_group_apart_from_earnings`; Welfare Reform Act 2012 ss 19 to 21): for example one with limited capability for work-related activity, a carer, a claimant over State Pension Credit qualifying age, or the responsible carer of a child under 3. Only one member of a couple is the responsible carer (`uc_is_responsible_carer`); where the nomination is not supplied the model takes the claimant who works fewer hours (`hours_worked`), then the elder. `hours_worked` defaults to 0, so for a couple entered without hours the default falls to the elder; supply `uc_is_responsible_carer` where the nomination is known. The floor is the minimum wage for their age for their expected hours (`uc_expected_hours`: 35 a week, or for the responsible carer of a child under 13 the hours DWP uses: 30 from February 2025, from April 2017 until then 16 for a child under compulsory school age and 25 for an older child, and 25 for any child under 13 before April 2017; regs 88 and 90(2)), less the income tax and the Class 2 and Class 4 National Insurance a self-employed person would pay on it (reg 62(4)(b) leaves this amount to the Secretary of State; this is the basis of DWP's guidance and figures, and setting the `gov.dwp.universal_credit.means_test.minimum_income_floor.self_employed_national_insurance` parameter to false deducts primary Class 1 instead). A member of a couple is lifted only while the couple's combined earnings are below the couple threshold, and never above it (reg 62(3)). The couple threshold is the sum of both partners' thresholds (reg 90(3)): 16 hours for a partner in the work-focused interview or work preparation group, nothing for a partner with no work-related requirements for a reason other than earnings, and 35 hours at the national living wage (the adult rate before April 2016) for a partner who cannot be a joint claimant (reg 90(3)(b)). The maximum entitlement is then reduced by 55% (the `gov.dwp.universal_credit.means_test.reduction_rate` parameter) of the claimants' combined earnings above the work allowance (`uc_work_allowance`), and by all of the claimants' unearned income (`uc_unearned_income`), pound for pound. Unearned income is the list in `gov.dwp.universal_credit.means_test.income_definitions.unearned`: retirement pension income (State Pension and private pensions, UC Regulations 2013 regs 66(1)(a) and 67), Carer's Allowance, carer support payment (up to the Carer's Allowance rate, from November 2023), contribution-based JSA and ESA, maternity allowance, industrial injuries benefit, and the tariff income deemed from capital (reg 72). Actual savings interest, dividends and ordinary rental income are excluded from UC unearned income at every capital level; capital counts through its tariff income instead. Asset rules apply on top of this — capital above the lower threshold deems a tariff income, and capital above the upper threshold disqualifies the benunit entirely.\n3. **Benefit cap**: the post-means-test award (`universal_credit_pre_benefit_cap`) is finally reduced by `benefit_cap_reduction` to produce `universal_credit`. The cap does not apply where the claimants earn enough (the earnings exception reads the claimants' earnings only, reg 82(1)(a)) or the family gets working tax credit, or where a claimant or, for some benefits, a child or qualifying young person they are responsible for receives a benefit listed in UC Regs 2013 reg 83 (for example ESA with the support component, disability living allowance or personal independence payment). Another member's benefits do not count, and nor do those of a partner who cannot be a joint claimant under reg 3(3) (`is_benefit_cap_exempt`). The capped total counts only the welfare benefits to which the claimant or couple is entitled (WRA 2012 s.96(1); reg 80(1)), and the childcare work condition tests only the claimants (reg 32(1)).\n\nThe take-up step is handled by the input variable `would_claim_uc`, which is populated stochastically when the dataset is built so that PolicyEngine's caseload aggregates match published DWP claimant numbers rather than the full eligible population.\n\nParameters live in `policyengine_uk/parameters/gov/dwp/universal_credit/` and the per-element formulas in `policyengine_uk/variables/gov/dwp/universal_credit/`."
   },
   {
    "cell_type": "code",

policyengine_uk/tests/policy/baseline/finance/benefit/family/legacy_award_readers/passports.yaml

@@ -338,21 +338,40 @@
     targeted_childcare_entitlement_eligible: true
 
 # Benefit cap: no cap where "the claimant or the claimant's partner" receives
-# ESA with the support component (HB Regs 2006 reg 75F(1)(a)). The model
-# exempts any income-related ESA. This PR leaves the cap's reading of the
-# benefit unit's ESA unchanged: scoping the exemption alone would cap the
-# claimant with another member's own award in the capped sum
-# (benefit_cap_reduction), which is out of scope here. The claimant's own
-# award still exempts the family.
+# ESA with the support component (HB Regs 2006 reg 75F(1)(a)).
 
-- name: The claimant's own income-related ESA exempts the family from the benefit cap
+- name: Another member's income-related ESA does not exempt the family from the benefit cap
+  period: 2025
+  input:
+    people:
+      claimant:
+        age: 40
+        is_claimant_or_partner: true
+      other:
+        age: 30
+        is_claimant_or_partner: false
+        current_education: NOT_IN_EDUCATION
+        esa_income_reported: 5_000
+        esa_includes_support_component: true
+    benunits:
+      benunit:
+        members: [claimant, other]
+        working_tax_credit: 0
+    households:
+      household:
+        members: [claimant, other]
+  output:
+    is_benefit_cap_exempt_health_disability: false
+
+- name: The claimant's own income-related ESA with the support component exempts the family from the benefit cap
   period: 2025
   input:
     people:
       claimant:
         age: 40
         is_claimant_or_partner: true
         esa_income_reported: 5_000
+        esa_includes_support_component: true
       other:
         age: 30
         is_claimant_or_partner: false

policyengine_uk/tests/policy/baseline/finance/benefit/family/universal_credit/childcare_element/uc_childcare_work_condition_reg_32.yaml

@@ -67,6 +67,35 @@
     uc_limited_capability_for_WRA: [false, true]
     uc_childcare_work_condition: true
 
+- name: Reg. 32(1)(b)(i) - a partner whose own ESA lacks the support component still has limited capability for work
+  period: 2025
+  absolute_error_margin: 0
+  input:
+    people:
+      claimant:
+        age: 35
+        employment_income: 15_000
+      partner:
+        age: 34
+        is_disabled_for_benefits: true
+        has_own_esa_award: true
+        esa_includes_support_component: false
+    benunits:
+      benunit:
+        members: [claimant, partner]
+    households:
+      household:
+        members: [claimant, partner]
+  output:
+    # An ESA award without the support component means no limited capability
+    # for work-related activity (UC Regs 2013 reg. 40(1)(a)(ii)), but the
+    # partner still has limited capability for work (reg. 39), so limb (i)
+    # holds.
+    uc_limited_capability_for_WRA: [false, false]
+    uc_limited_capability_for_work: [false, true]
+    uc_unable_to_provide_childcare: [false, true]
+    uc_childcare_work_condition: true
+
 - name: Reg. 32(1)(b)(ii) - ADM F7013 example, a partner caring full time for her disabled mother
   period: 2025
   absolute_error_margin: 0.01