The economics of Universal Credit

A possible day-pay approach to assessing earnings.


I started with the data which is passed across from employers in the existing RTI submission.  Using that, I’m able to assess the dates for which pay is made (Making the assumption that it ends on the date of pay submitted).  From that, I can determine the number of days falling with each assessment period for each pay period.  That gives me the number of paid-days in total within each AP.  I used a rather crude Pay-period -> Annual pay -> Day rate to then derive the pay attributable to the AP and adjust the UC using that. 


It’s crude and unfinished but it does:


a)    Prove it can be done with existing data

b)    Smooths the result

The chart alongside shows an existing weekly cycle with 4 or 5 pay days in each AP, compared to a day-rate version.  The small variations are due to the varying number of days in the AP.













The same approach with a last working day of the month pay-date. The day-based calculation ensures UC is payable, in this example, in APs which would have no UC entitlement under current rules.




Day pay tables



















16 March 2020