Universal Credit

1. Universal Credit Peter Meehan HB Adviser 27th August 2014 pgmeehan@sky.com

2. Welfare Reform ActMarch 2012 Universal Credit DLA to PIP Localisation of CT Support Localisation of Social Fund Single Fraud Investigation Service

3. Aims Improve financial work incentives Remove barriers to work Empowerment Smooth transitions in and out of work Reduce expensive admin. duplication Reduce Fraud and Error Break benefits dependency culture

4. Universal Credit will replace JSA (income based) ESA (income related) Income Support Child Tax Credit Working Tax Credit Housing Benefit

5. Universal Credit will comprise Standard Allowance element Child Element Child Care Costs element Capability for Work element Carer element Housing costs element

6. UC Rates 2014/15 (monthly figures) • Standard Allowance Single < 25 £249.28 • Single > 25 £314.67 • Couple < 25 £391.29 • Couple > 25 £493.95 • Child Element First child £274.58 • Second + £229.17

7. UC Rates 2014/15 (continued) • Disabled Child or young person addition • Lower rate £124.86 • Higher rate £362.92 • Limited Capability for work £124.86 • Limited Capability for work and work related activity £311.86

8. Housing ElementWhat rent will be covered? For private tenants the ‘housing costs element’ in Universal Credit will carry forward existing Local Housing Allowance provisions and rates. For council tenants and tenants of Registered Social Landlords ( including Housing Associations) the actual rent less any ineligible service charges will be covered (initially but in longer term…..???????)

9. Conditionality – Claimant Commitment For those out of work For those already in work Sanctions if failure to meet conditions

10. How will UC be claimed Main claim service will be on-line via DWP’s secure website, strictly controlled by passwords and Identity Assurance. Notification/award letters to be sent mainly electronically instead of hard copies. Some support provision for those who cannot use such a facility ( eg call centre, local JCP offices) Data will be drawn from DWP and HMRC systems for new claims and UC will be updated monthly to take account of most up to date earnings. Not yet clear how verification and validationof rents and occupancy checks will be carried out.

11. How will UC be paid Paid directly to claimant using BACS Paid monthly in arrears to claimant for the household One payment, to head of household Paid to different claimants on different days of the month, determined by the date of claim ‘Safeguards’ are being considered for vulnerable claimants, including those who have failed to pay their rent, which would see the housing element of Universal Credit paid directly to the landlord (so called managed rent payments).

12. Universal Credit : recent developments Universal Credit national roll out, originally scheduled to begin from October 2013, has been delayed. A root and branch review of the whole Universal Credit development was carried out by new Director General, Howard Shiplee , against the background of a scathing report by National Audit Office. HB for pensioners will remain in place for all claimants over 60 until at least financial year 2017/18 (delayed because the introduction of the Single Tier State Pension which has been brought forward to 2016).

13. Recent statement by IDS on Universal Credit IT development (5th Dec 2013) • Change in IT strategy • Development of a ‘Digital’ solution • Testing during 2014 and 2015 • End State Solution complete and ready by end of 2015 • No new claims for JSA anywhere by end of 2016

14. Universal Credit • UC is currently live in 10 Pathfinder areas. • Original 4 sites (Tameside, Oldham, Wigan and Warrington) • Hammersmith/Fulham went live from October 2013 • Rugby and Inverness went live from November 2013 • Bath/NE Somerset and Harrogate went live from February 2014 • One final pathfinder, Flintshire, went live from April 2014

15. UC Pathfinder caseload dataApril 2013 to March 2014 • Between April 2013 and 31st May 2014 a total of 8,500 single people had started on Universal Credit • On 31st May 2014, 6,570 claimants remained on UC caseload • Male to female ratio 7:3 • Majority of new claims (60%) under 25 (so how many have housing costs????) • Moving into the second year, still small numbers of the easiest possible claims (single claimants only) being allowed, mainly being processed manually using spread sheet technology.

16. UC roll-out : next steps in 2014 • claimant scope will be expanded in the pathfinder sites to include couples (summer of 2014) and then families (when depending on ‘system’ readiness). • geography will be expanded to take in more of the North West of England using a flexible approach to sequencing, dependant on testing and learning • this will conclude investment in the pathfinders

17. UC roll-out : 2014/15 • The core digital service will deliver to 100 people initially, continuing progressive approach to test, learn and implement as programme is delivered

18. UC roll-out : 2016 • all areas will go live for new claims at some time in 2016, with no new claims for existing benefits for those of working age by end of calendar year • some migration will start, with all existing claims to be transferred over to Universal Credit by the end of 2017 (with the exception of 700,000 sick and disabled claimants who will remain on ESA and HB for foreseeable future)

19. UC next steps : LSSF • Local Support Service Framework continues to be developed, primarily building on the work in the early LA led pilots but with some limited expansion to new LA areas. • Expressions of interest in LSSF trialling work have been invited from LAs across the UK.

20. Lord Freud speech to CIH Conference June 2013 ‘So this is to guarantee to you that, if you inform us that two months arrears have built up we will move the claimant to managed payments’ ‘..we are also looking at going further and we have decided that if one month of arrears builds up we will intervene and review our initial decision on direct payments, including if arrears build up over time to the equivalent of one month’s rent’ ‘Options at this point could include a reassessment of the individual’s financial capability, a possible move to managed payments, or possible extra support to get the claimant on the right track, to prevent the accumulation of further arrears’ ‘I am also clear that for the majority of claimants managed rent payments should not be permanent’

21. Lord Freud : CIH Conference (contd) ‘We have decided to provide additional protection to landlords by accelerating the rate at which we recover the arrears for those switched back to managed payments’ ‘Typically, if a claimant is not repaying other debts we would hope to recoup rent arrears from tenants hitting the two month trigger point within six to nine months’ ‘Once arrears have been paid, we will look to return tenants to direct payments, with the right support in place. We don’t want non-payment of rent to be a way out of direct payments’

22. Arrears Recovery Example 2 months arrears @ £320 per month = £640 Recovered over 6 months = £106.66 per month Recovered over 9 months = £ 71.10 per month Either arrangement over and above payment of current month rent. Will leave a huge hole in subsistence money?