Universal credit – past, present and future

CPAG in Scotland’s Early Warning System has been operating for ten years! Over Challenge Poverty Week we are looking back at some of the social security events in this period, key findings from the Early Warning System and how they have influenced policy and practise. Today we are looking back at universal credit and how Early Warning System evidence can influence its future.

Past

The Early Warning System first started receiving case evidence about universal credit in 2015. This is taken from one of our first reports on universal credit:

There are some advantages to universal credit. You do not have to claim a new benefit every time your circumstances changes, for example, you move in or out of work or ill health. It should rise and fall alongside your income unlike tax credits which were based on your previous year’s income. In theory it should provide better support to people starting work. However, we have also found:

• many people receive lower amounts of universal credit than they would receive through one of the benefits being replaced by universal credit
• financial pitfalls built into the administration of universal credit, for example the seven-day waiting period at the beginning of the claim and the six week wait for the first payment
• administrative errors leaving claimants without money for themselves or to pay the rent.

Since that report was written the seven-day wait has been abolished, reducing the wait time for the first payment from six to five weeks, but today we continue to see people struggle with the wait for the first payment, being worse off after moving to universal credit and administrative errors causing hardship.

Present

We continue to monitor universal credit closely, not just in its own right, but for its interaction with Scottish social security. For example: universal credit is a passport to Scottish child payment and Best Start grants.

A lone parent and her baby are currently staying in temporary accommodation. Housing costs for temporary accommodation are paid by housing benefit rather than universal credit. Because the mum is receiving maternity allowance, her income is too high for her to be entitled to universal credit, unless her housing costs are included. This means that she is not entitled to SCP because she is not in receipt of a qualifying benefit – but potentially would be if she was staying in different accommodation.

Awards of adult disability payment or child disability payment can lead to additional amounts being paid in universal credit. We report findings back to DWP and Social Security Scotland, as well as Scottish government officials in relation to paying for childcare or the interaction with discretionary housing payments.

A mum claiming childcare costs through UC was getting £1108 when she had two children in childcare, but now only has one child attending nursery. The actual cost is £916 a month. This is the same amount every month, paid on the first of the month. Her AP runs from the 19th of the month. This month she received £270 as her childcare element, the month before it was £578. There is no breakdown in the award pdf or her journal so neither client nor her adviser have been able to account for the fluctuation.

Future

Up until recently people who were already getting one of the benefits being replaced by universal credit (legacy benefits), only had to make a claim for universal credit if there was a change in circumstances such as the birth of their first child, needing help with childcare or housing costs or relationship breakdown. However, the DWP have now begun the process of ‘inviting’ people who are getting legacy benefits to claim universal credit.

No one should be worse off on universal credit when they move over but early findings highlight this is not always the case.

A couple have one child who is in residential care during the week. Mum gets carers allowance and Dad is self-employed. The child will not be included in the UC calculation because they are in residential care so there will be no child element or work allowance. This means when the couple move from tax credits to universal credit they will be about £800 a month worse off and there will be no transitional protection either.

DWP statistics report that two thirds of the first cohort successfully moved from tax credits to universal credit with minimal support, but 5% were late claiming universal credit and 28% did not claim universal credit at all and had their legacy benefits stopped.  It is more important that ever that we collect case evidence about universal credit’s impact on families and managed migrations so we can identify emerging issues and what can be done to address them.

The Early Warning System in Scotland will be sharing case evidence with CPAG’s managed migration project. It is gathering evidence to identify the difficulties claimants face when they go through managed migration and how they adjust after the move. By sharing this information with the Department for Work and Pensions (DWP) on an ongoing basis and making recommendations in the hope of improving the process of managed migration before it is rolled out at scale.

Scottish Early Warning System case evidence will also continue to inform CPAG’s wider policy work on what the UK government needs to change to make universal credit fit for families. Priorities must include: addressing its inadequacy by increasing the child element and reducing the maximum reductions that can be made to universal credit payments; filling the gaps in the support it provides by scrapping the benefit cap, two child limit and young person penalty; ensuring it provides better support for people moving into work by increasing the work allowance for second earners and ensuring the claims process does not push families into debt and severe hardship by ending the five week wait for a first payment.

Submit Case Studies

For more information about the Early Warning System please contact: [email protected].

You can submit anonymous case studies through our online form.