Wednesday, 16 January 2019

Demystifying Universal Credit

This week further announcements were made about the Universal Credit. In this post we will look at what was announced and what it means for claimants.

Roll-Out of Universal Credit by Managed Migration

Managed Migration means the process by which the Department of Work and Pensions (DWP) plans to transfer people in receipt of the six existing benefits (which have been incorporated into Universal Credit), onto Universal Credit. The six benefits are: Income Support, Jobseekers Allowance, Employment and Support Allowance, Working Tax Credit, Child Tax Credit and, Housing Benefit. The DWP now calls these ‘legacy benefits’.

The DWP plans to begin Managed Migration in 2019. This will involve asking people already in receipt of legacy benefits to make a claim for Universal Credit. There has been a lot of comment about this roll-out being postponed but at present it is still going ahead as planned. The DWP are proposing to limit the managed migration to an initial number of 10,000 test cases before going back to Parliament for permission to begin fully migrating claimants onto Universal Credit.

Currently, if a claimant receiving legacy benefits has a change of circumstances (such as a new child or a separation) they may need to claim Universal Credit as new claims for legacy benefits are not being accepted except for a few limited exceptions. This process of claiming after a change of circumstances is known as Natural Migration. So for example if a claimant has their ESA stopped, they can no longer claim JSA and must claim Universal Credit.

Claimants in receipt of a Severe Disability Premium

A Severe Disability Premium is an extra payment added to a benefit claim for people in receipt of the daily living component of Personal Independence Payment or the care component of Disability Living Allowance. Universal Credit does not include Severe Disability Premiums so claimants who have had to claim have been losing out financially.

From today (16 January 2019), any claimant who is receiving, or entitled to, a Severe Disability Premium as part of their legacy benefit claim will not be able to claim Universal Credit and will not be affected by Natural Migration.

This change only affects claimants from today. People who have already transferred to Universal Credit and lost a Severe Disability Premium have been promised compensation by the DWP but this has not been passed in law so no further information is available.

Families with more than two children

Due to an error with the way the Universal Credit system was created, any family with more than two children has been unable to make a claim for Universal Credit. This has meant that families with three or more children have been able to continue making a claim for legacy benefits even if they have had a change of circumstances.

This loophole has now been resolved and from 1 February 2019 families of any size will have to claim Universal Credit if they make a new claim or have a change of circumstances.

However, Universal Credit payments will be limited to two children. There will be no extra payments for families with more than two children if the children were born after 6 April 2017.

This means that families with any number of children born before 6 April 2017 will receive Universal Credit payments for all of those children. No additional payment will be made for any children born after that date. For families with one or two children, their Universal Credit payment will be limited to two children regardless of how many more they have after 6 April 2017.

People of pension age with younger partners

In a long-expected move, the DWP has announced a date for changes which affect claimants where one partner in a couple is of pension age and the other is working age.

Currently if a person is of pension age but they have a partner of working age, the couple can make a claim for Pension Credit rather than Universal Credit. Pension Credit is usually preferable to Universal Credit.

The DWP has announced that from 15 May 2019 the rules will change. In cases where one person in a couple is under pension age the couple will be obliged to claim Universal Credit until the younger partner reaches pension age.

Further information

For more information or advice on how Universal Credit may affect you visit the Citizens Advice website or the website. Alternatively for face to face advice visit your local Citizens Advice drop in session.