Universal Credit & Benefit Cap

1. Universal Credit & Benefit Cap Cheryl Ward & Mike Dann December 2015

2. Universal Credit: labour market transformation ‘CURRENT’ UNIVERSAL CREDIT Tax Credits – no requirements 4,400,000 claimants Households “working enough” – no requirements 4,000,000 claimants • UC activates more people: circa 2 million more claimants will be brought into an active benefit regime • It rewards work • It places greater expectations on claimants provides staff with increased flexibility and rebalances the relationship between claimant and Coach • It replicates the world of work • It is an in and out of work benefit… • …and it is transformative for the claimant, employers, partners and staff Households “working could do more” – light touch & trials 1,000,000 claimants JSA – worksearch regime 850,000 claimants Workless / very low earning households– intensive worksearch regime 1,900,000 claimants ESA WRAG – prepare for work 650,000 claimants ESA assessment phase – no requirements – 250,000 Income support lone parents – keep in touch - 450,000 Workless / very low earning households – LCW & parents 3 and 4 year olds – work preparation 700,000 claimants Partners of claimants – limited or no reqts 700,000 claimants Parents 1 and 2 yr olds - keep in touch - 300,000 HB / CTC only – no requirements 350,000 claimants Note: figures reflect anticipated volumes of income related benefit claimants in UC steady state (approx.2017 / 18) ESA support Group, carers, IB reassessment 850,000 claimants ESA support Group, carers, IB reassessment 1,000,000 claimants Official - Sensitive

3. Universal Credit – experience so far 65% of people are finding Universal Credit a better financial incentive to work. Households on Universal Credit do more to find work – nearly double the number of hours of job search compared to Jobseekers Allowance. 92% of claimants agreed they were encouraged to find work, or increase the amount they were working. Those who are on Universal Credit report that they are working more over a six-month period. People find Universal Credit easier to understand. People consider Universal Credit a better reward for additional work.

4. Universal Credit Caseload

5. Local Delivery Partners The purpose of the partnerships approach is joined up “coherent claimant journey” for claimants with complex needs, from benefits dependency to independence and, where appropriate, work

6. Personal Budgeting Support Paying rent direct to landlord Made by UC decision maker via PBS process Splitting the payment within the household More frequent than monthly payments Claimants managing their money Basic Bank Accounts from major banks from end 2015 Available to anyone on UC Part of work coach role Personal planner on GOV.UK Credit Union jam jar accounts Face to Face and online tool 1.3 million potential UC claimants do not use a transactional bank account to manage benefit payments

7. In Work Progression Pilots Being delivered as part of the Plymouth UC Roll-out and in Cornwall From March 2016 This introduces for the first time, active support and encouragement for claimants who are in low-paid work, or in low-earning households, to earn more and become more independent and self-sufficient. Universal Credit Claimants , who are eligible for the Trial, will be identified in Work Services Platform. This will automatically allocate claimants to 1 of 3 IWP Groups using their National Insurance numbers. This will determine the type of claimant contact over the period of the Trial. The Trial Groups are: Group 1 – Work Search Reviews every 8 weeks Group 2 – Fortnightly Work Search Reviews Group 3 – current UC light Touch Regime

8. What is ‘digital UC’? Ministers have set out plans to expand the full Universal Credit service from May 2016, area by area. This will give claimants greater control over their claim through their online account. The full service will be expanded for all claimant groups and in rollout areas people will no longer be able to make new claims to benefits under the old system.

9. Differences between Live service & Digital Gateway changes to enable all UC claimant groups to claim Creation of UC account Interaction with Work Coach and UC Service Centre via on-line account Different rules at outset of claim where claimant will have greater responsibility Changes to child care allowances: Treatment of earnings Re-awards & reclaims

10. Claimant opens account to claim UC online. It’s the claimants account to manage and interact with the DWP. After six months of continuous no entitlement then the claim closes. Claimant may attend claimant commitment interview dependant on workgroup. Here they will receive tailored support from a work coach. Support continues digitally until claimant is on a zero payment. However if their situation changes, they can report this online. A relationship is built with a mixture of face to face and digital / remote coaching using To Do’s and Journal entries. Payments are shown too. As the claimant finds work they can report this online and still receive support as their UC entitlement decreases. The service adapts to claimants circumstances and the coaching channel shifts with it. The more self sufficient – the more digital the interaction

11. Benefit cap the current assumption is that the new cap is expected to be in place across the country in 2017. The level of the benefit cap will change to £23,000 in Greater London and £20,000 in the rest of Great Britain for couples with or without children, and lone parent households. The capping level for single adults without children will be £15,410 in Greater London and £13,400 in the rest of Great Britain.

12. Benefit Cap • Claimant notifications and claimant support will commence from spring 2016. • Application of the new benefit cap changes will commence from autumn 2016 through to early 2017. We envisage that the new cap levels would be applied much as the existing cap is applied now: • For current benefit claimants: when a household’s total benefit entitlement exceeds the cap the local authority will reduce the level of housing benefit by the excess amount subject to the amount of Housing Benefit in payment; or • For Universal Credit claimants: when a household’s total benefit entitlement exceeds the cap the Universal Credit award will be reduced by the excess amount by DWP Decision Makers.

13. Benefit Cap Expected volumes to be published on 12/02/16 Letters to those affected will start from 09-23/05/16 Two groups ,those that are currently capped and newly identified claimants All claimants to receive employment support which will include access to work programme support products or current work coach options.

14. Benefit Cap – Benefits included in the Cap Bereavement Allowance Universal Credit Child Benefit / Child Tax Credit Income Support Widow’s Pension Maternity Allowance Jobseeker’s Allowance Widowed Parent’s / Widowed Mothers Allowance Housing Benefit Employment and Support Allowance Guardian’s Allowance Carer’s Allowance Incapacity Benefit Severe Disablement Allowance

15. Fee Free Bank Accounts announcement follows last Christmas’ landmark agreement between the government and the banking industry to establish new basic bank accounts that will end bank charges if a direct debit or standing order fails. Basic bank account customers will now also be offered services on the same terms as other personal current accounts that the banks provides, including access to all the standard over-the-counter services at bank branches and at the Post Office, and access to the entire ATM network Economic Secretary Harriett Baldwin said: ‘’I’m delighted that for the first time, truly fee-free basic bank accounts will be available to anyone who doesn’t already have an account, or isn’t able to use their existing account due to financial difficulty.”

16. The banks and building societies that have signed up to offer a basic bank account from 1 January 2016 and their corresponding bank account product are: •Barclays – Barclays Basic Current Account •Santander – Basic Current Account •NatWest – Foundation Account •Ulster Bank (Northern Ireland) – Foundation Account •The Royal Bank of Scotland (Scotland) – Foundation Account •RBS England & Wales – Basic Account •HSBC – Basic Bank Account •Nationwide – FlexBasic •Co-operative Bank – Cashminder •Lloyds Banking Group (including Halifax and Bank of Scotland brands) – Basic Account •TSB – Cash Account •National Australia Bank Group (including Yorkshire Bank and Clydesdale brands) – Readycash Account