Budget and benefits | CPAG

Budget and benefits

03 December 2018
Issue 267 (December 2018)

The 2018 Budget included some changes to universal credit (UC). It also announced other social security changes. Jon Shaw describes the plans.

The table below gives a timeline for the social security measures announced in the autumn Budget 2018,1 and the accompanying policy costings document.2 Further details are given in the following sections.

We know about some dates because relevant regulations have already been published. Draft regulations providing for the ‘managed migration’ to UC have also been published, but must be approved before both houses of parliament before they can be made.3


Date Change
28 November 2018 Two-child limit amended for some kinship carers and adopters
31 December 2018
UC housing costs restored to all 18-21-year-olds liable for rent
16 January 2019 Claimants getting a severe disability premium can no longer claim UC (except as part of the managed migration)
April 2019
  • UC work allowances increase
  • Dupuytren's contracture added to the list of prescribed diseases for industrial injuries benefits
July 2019 Planned start date for pilot of the managed migration to UC
October 2019 Maximum rate of deductions from a UC award reduced
April 2020
  • UC surplus earnings threshold reduced
  • Statutory bereavement pay introduced for parents
22 July 2020 Two-week run-on of DWP legacy benefits for claimants transferring to UC
23 September 2020 Grace period before minimum income floor applies for all first-time UC claimants
October 2021 Period over which UC advances recovered increased to 16 months
October 2023 HB for pensioners becomes part of pension credit


The future of housing benefit

Housing benefit (HB) for people of pension age will now not be rolled into pension credit (PC) until 2023. This date has been chosen to align with the planned completion of the roll-out of UC. In a separate announcement, it was confirmed that funding for supported housing will now ‘remain in the welfare system’. It is not clear whether HB will continue to exist beyond 2023, or whether the UC and PC housing elements will eventually provide support for non-mainstream tenancies.4

Statutory bereavement pay

From April 2020, if a child under 18 dies (or there is a stillbirth after 24 weeks of pregnancy), employed parents will be entitled to two weeks' statutory leave. A new statutory bereavement payment will complement this for those who meet ‘eligibility criteria’. This seems likely to be a reference to rules around length of continuous employment and level of earnings – as apply to current statutory payments.4

Industrial injuries benefits for Dupuytren’s contracture

Following a recommendation from the Industrial Injuries Advisory Council (IIAC),5 Dupuytren’s contracture will be added to the list of prescribed diseases for industrial injuries disablement benefit. Assuming that IIAC’s recommendations are fully accepted, work for 10 years using handheld power tools which transmit vibration to the hands (for at least two hours a day on three days a week) will be required to qualify. The change is due to happen in April 2019.

Two-child limit changes

Following a CPAG test case,6 the">www.cpag.org.uk/content/two-child-limit-challenge. the government previously announced that the two-child limit would be amended.7 Claimants who are kinship carers or adoptive parents can now get UC or child tax credit for those children, and still get support for at least two of their birth children, regardless of the order in which they joined the household.

Universal credit changes

Changes to UC are largely focused on the process of transferring claimants to it. Like the DWP, this article uses ‘natural migration’ to describe the ongoing transfer of claimants who must make a new UC claim as they can no longer claim a benefit replaced by it. ‘Managed migration’ describes the transfer of claimants whose circumstances have not changed to UC, by requiring them to claim it.

Housing costs for 18–21-year-olds

Since April 2017, some single 18–21-year-olds cannot get the UC housing costs element. Amending regulations reverse this change from 31 December 2018.

Ending natural migration for claimants who get a severe disability premium

It is expected that claimants getting a severe disability premium (SDP) will not be able to claim UC (and so cannot ‘naturally migrate’ to UC) from 16 January 2019. Claimants who got an SDP and have already migrated to UC should eventually be awarded retrospective compensation in the form of a ‘transitional SDP payment’. Note that claimants getting an SDP can be transferred to UC under managed migration.8

Work allowance

The work allowance is the amount a claimant can earn before her/his UC award starts to be reduced. It will increase by £1,000 a year from April 2019.9 Note">www.gov.uk/government/publications/benefit-and-pension-rates-2019-to-202... that only claimants in a household with children or an adult with limited capability for work get a work allowance. Other claimants in work will still have their UC tapered away by all of their earnings.

Managed migration

The budget announcements relating to the managed migration to UC left it unclear when this process is due to begin. The government response to the SSAC’s report on managed migration has helpfully clarified that this will be piloted on a small scale from July 2019, with ‘larger volumes from 2020’.10

Assuming that the UC migration regulations are approved, for claimants who are part of the managed migration, there will be: 11

  • a one-year disregard of capital over £16,000 for tax credits claimants who would not otherwise be eligible for UC;
  • a 12-month grace period before the minimum income floor (MIF) applies;
  • discretionary hardship payments where the DWP thinks they are appropriate;
  • transitional eligibility for students until their current course ends;
  • a transitional element for those who would otherwise be worse off on UC than legacy benefits.

The roll-out of UC is now due to be completed by the end of 2023. But contingency was also made in the budget for a six-month delay, to mirror assumptions made by the Office for Budget Responsibility.

Surplus earnings rule

The surplus earnings rule treats people reclaiming UC within six months of their award ending due to earnings as still possessing ‘surplus earnings’ received during that period. At present, the threshold above which these rules bite is £2,500. This will drop to £300 from April 2020 (and not April 2019, as previously planned).

Minimum income floor

UC claimants who are ‘gainfully self-employed’ and would otherwise be subject to all work-related requirements are subject to the MIF if they have been self-employed for over 12 months. The MIF treats them as earning the minimum wage for their declared hours of work, if their profits are lower than this. If the UC migration regulations are passed, from September 2020, a one-year grace period before the MIF bites will apply to all first-time UC claimants, including natural migrations, no matter how long they have been self-employed.

Two-week run-on

Under draft rules, from July 2020, claimants getting income-related employment and support allowance, income-based jobseeker’s allowance and income support when they claim UC will get these benefits for two weeks after their UC date of claim. This is similar to the current two-week transitional payment of HB.

There is no equivalent provision to extend tax credits awards for people transferring to UC.

Universal credit advances

From October 2019, the maximum rate of deductions from a UC award will reduce to 30 per cent (from 40 per cent). Also, from October 2021, the maximum period for recovery of a UC advance will increase to 16 months (from 12 months). Advisers should bear in mind that the maximum recovery period is set out in guidance and not regulations, so arguably should not be rigidly applied.12">www.cpag.org.uk/content/ask-cpag-online-how-do-you-repay-universal-credi...



Please be aware that welfare rights law and guidance change frequently. Older Bulletin articles may be out of date. Use keywords or the search function to find more recent material on this topic.

  • 1. HM Treasury, Budget 2018, HC 1629, October 2018
  • 2. HM Treasury, Budget 2018: policy costings, October 2018
  • 3. Universal Credit (Managed Migration) Regulations 2018 (‘draft UC Migration Regs’)
  • 4. See Chapter 38 of the Welfare Benefits and Tax Credits Handbook 2018-19 for details.
  • 5. Industrial Injuries Advisory Council, Dupuytren’s Contracture Due to Hand-transmitted Vibration, Cm 8860, May 2014
  • 6. SC & Ors v SSWP & Ors [2018] EWHC 864 (Admin). CPAG is challenging some aspects of the High Court’s decision in the Court of Appeal. For further details, see 7. House of Commons, Hansard, ‘Extending support in universal credit and child tax credit’, Written statement HCWS653, 27 April 2018
  • 8. Proposed reg 64 and Sch 2 Universal Credit (Transitional Provisions) Regulations 2014, No. 1230 (‘UC(TP) Regs’), to be inserted by reg 2 draft UC Migration Regs
  • 9. The proposed work allowances from April 2019 are £503 per assessment period for claimants without a housing costs element, and £287 for other eligible claimants – see 10. The Draft Universal Credit (Managed Migration) Regulations 2018 (SI 2018/****), SSAC report and SSWP statement, November 2018
  • 11. Amendments to the UC(TP) Regs, to be inserted by the draft UC Migration Regs
  • 12. For further details, see