Universal Credit

1. Universal Credit December 2012 Kairen Francis Partnerships Manager DWP Jobcentre Plus Staffordshire and Shropshire

2. The Welfare Reform Act 2012 The Act introduces a wide range of reforms to: make the benefits and tax credits system simpler; create the right incentives to get more people into work; protect the most vulnerable in our society: and deliver fairness to those claiming benefit and to the tax payer. Universal Credit is at the heart of the Act and the Government’s reforms. Regulations needed to implement key policies in the Act, including Universal Credit, were laid and published on 10 December 2012.

3. What is Universal Credit? that tackles welfare dependency, poverty and worklessness by making work pay A policy that replaces a complex system of working-age benefits and credits with the Universal Credit and a single set of rules A benefit that together with our employment support programmes, helps people into work A gateway that will help us deliver an internet-age service whilst continuing face-to-face support for those who need it A platform An ambition transforming lives and society through work

4. How is Universal Credit different? Universal Credit Current System The welfare system has more than 30 benefits each with their own rules and criteria Universal Credit provides a new single online system of means-tested support for working-age people who are in or out of work Work incentives can be very low, benefits are reduced to take account of earnings but different benefits have different rules Universal Credit will make work pay. Financial support will be reduced at a consistent and predictable rate and people will generally keep a higher proportion of their earnings Conditionality: some benefit claimants are capable of working but have no obligations to look for work Universal Creditwill personalise conditions according to people’s capability and circumstances Universal Creditis paid on a calendar monthly basis in a single paymentto each household (we will retain ability to pay more frequently or to split payment in exceptional circumstances) Payments are paid to different adults in a household and for various periods

5. Simplifying a complex system Current system Income related JSA Income related ESA Income Support (including SMI) Working Tax Credits Child Tax Credits Housing Benefit UniversalCredit Disability LivingAllowance Personal Independence Payment … to include support for housing and children Pension Credit Child Benefit, Carer’s Allowance (will remain) Council Tax Benefit (Localised Council Tax Schemes) Contributory JSA and ESA (conditionality rules changing)

6. Making work pay • The way UC treats people’s earnings will mean that they are better off in work than they would be in the legacy system. We want people to be clear that getting a job and increasing their earnings will benefit them. • UC is designed to allow people to keep more of their benefit in the transitional period back to work. • A simple disregard structure and single taper rate means people are better able to understand their benefit income. • Work allowances (earnings disregards) • Disregards are an income allowance, i.e. earnings up to a certain level are ignored when calculating how much UC they should receive. • The UC work allowances vary by household composition – structured to focus on those groups who face the highest barriers to work. • The rates for 2013-14 were set out in the Autumn Statement 2012. • The taper • Earnings will reduce UC awards at a steady rate of 65 per cent once work allowances are exhausted - this means that 35 pence in every pound earned would be kept.

7. A simpler system with clear work incentives

8. Real Time Information HMRC’s Real Time Information (RTI) programme aims to improve the operation of Pay As You Earn (PAYE) and support the introduction of Universal Credit. Universal Credit will make work pay by reducing financial support consistently, taking actual earnings into account at the time they are received – using RTI. Employers will report PAYE income and deductions to HMRC when they pay employees. If employee is a UC claimant, HMRC will send DWP the information. DWP will assess UC entitlement on a monthly basis. RTI will be simpler and less burdensome for employers; this is a driving factor behind the changes. DWP and HMRC officials have been working closely together on the requirements and delivery of RTI and its support for Universal Credit. Most employers will be required to send PAYE returns in real time from April 2013 and all employers will be routinely reporting PAYE in real time ready for the start of Universal Credit in October 2013.

9. Universal Credit Designed and built around real claimant journeys

10. Universal Credit – how is the service being designed? Design is focused on claimant journeys System is built from scenarios with tangible stories – covering different household types and circumstances Building the system using an ‘Agile’ approach Build the system in small pieces Continuous testing – allows much earlier testing of the end-to-end processes Continuous feedback loops from claimants and staff Solve problems within the design process Match requirements to build

11. Designing the system - tested as we build

12. Universal Credit Digital by Default

13. Universal Credit – why a digital service? The service will be digital by default because: it is better for claimants, staff and taxpayers. It is: the future is digital:

14. What are we doing to prepare for channel shift? We plan to work across government, private sector and voluntary sector boundaries to create, support and encourage opportunities to deliver the digital message. DWP We are increasing activities and support to boost take up of online services, e.g.: • through Digital Champions, • through providing computer access in Job Centres • through implementing JSAOL and using the lessons learned to shape future actions to support channel shift Public Sector Developing innovative approaches to getting social housing tenants online through the pilot Digital Deal Initiative Using customer contacts to deliver ‘digital interventions’ (e.g. when tax credits are claimed) HMRC are introducing iForms this autumn and improving information services on new website Private Sector In partnership with stakeholder organisations, persuading major employers to support and encourage their people to use work facilities to access online services Voluntary Sector Collaboration with Go On to extend our reach to a wider range of delivery partners than we can influence on our own Working with voluntary sector who help our claimants Providing advice, support and resources to claimants and potential claimants During migration Delivering targeted & timed adviceandguidance to claimants on why and how to get online

15. Security and identity assurance Security is a key issue for Universal Credit. Before an online claim can be made, we will seek to authenticate the identity of the claimant by using secure identification procedures. Only where the claimant’s identity is verified will the claim be treated as authenticated for the purpose of the Universal Credit. Where a person’s identity can’t be verified online, we will contact the claimant and request they bring in documentation to verify their identity.

16. Universal Credit Delivery - Transition

17. Universal Credit – implementation and transition challenge Universal Credit supports people into work and continues support to ensure that work pays. To deliver this we need to: Convert 12 million claims to 8 million household accounts Create a digital platform that both meets the needs of people who are used to managing their lives online, whilst helping claimants who need extra support to get online Ensure the right support for claimants Create a system capable of flexibility and continuous improvement

18. Pathfinder will take place from April 2013.It will test new payment system with local authorities, employers and claimants in a live environment – before national roll-out.Will target single, unemployed people, with or without rented housing costs, in selected areas in Tameside, Wigan, Oldham and Warrington local authority areas. Pathfinder North Lanarkshire West Dunbarton Edinburgh Dumfries & Galloway Wakefield Oldham Wigan West Lindsey Warrington Tameside Rushcliffe Shropshire Melton Birmingham Oxford Torfaen Southwark Caerphilly Newport Lewisham Bath & NES North Dorset Key: Pathfinder LA-led pilots Direct Payment Demonstration Projects

19. 2013 focus pilots -Twelve pilots will run from autumn 2012 to September 2013 to explore how local expertise can support residents to claim Universal Credit.2013 focus pilots will look at:- encouraging claimants to access online support independently; - improving financial independence and managing money;- delivering efficiencies and reducing fraud & error; and- reducing homelessness.Post 2015 focus pilots – onthe longer term role for local authorities in supporting Universal Credit claimants. Local Authority-led Pilots North Lanarkshire West Dunbarton Edinburgh Dumfries & Galloway Wakefield Oldham Wigan West Lindsey Rushcliffe Shropshire Melton Birmingham Oxford Torfaen Southwark Caerphilly Newport Lewisham Bath & NES North Dorset Key: LA-led pilots Pathfinder preparation projects Direct Payment Demonstration Projects

20. Universal Credit implementation – key dates Pathfinder begins APRIL 2013 National introduction of Universal Credit starts – gradual introduction and testing of further scope and functionality, and phasing out of claims for existing benefits From OCT 2013 Expansion - new claims from people in work and moving current claimants to Universal Credit in phased approach During 2014 Universal Credit roll-out complete 2017

21. Supporting financial inclusion Exploring better tools and accounts Supporting better budgeting Differentiation to recognise and respond to varying needs • Financial Products –working with range of banking and financial product providers to make services more accessible and supportive to low income households. Have issued a call for interest to providers to deliver these products • Tailored Support - working with advice sector to ensure claimants are able to access appropriate budgeting support • Exceptions – developing an exceptions framework for those not able to manage Universal Credit, even with support

22. Universal Credit Housing

23. Universal Credit and housing To help claimants prepare for Universal Credit, we will test key elements of incorporating housing support into Universal Credit whilst protecting the financial position of social landlords Direct Payment Demonstration Projects will run for a year in six local authority areas including Shropshire. Jun 2013Project completes , Aug / Sep 2013 Final Project evaluation report published Universal Credit will be paid to claimants who are in work and out of work. As most businesses pay monthly, Universal Credit will also be paid monthly. Claimants will be responsible for managing all household costs, including rent payments.

24. Universal Credit Working in partnership

25. Universal Credit - working with Local Authorities (LAs) We are using LA expertise, skills and success to inform the Universal Credit delivery. LA groups are represented within the Universal Credit Programme and individual LAs are represented on a range of working groups. LAs are taking part in the Direct Payment Demonstration Projects (started in June) and LA-led pilots (from autumn 2012). Have visited over 120 LAs and the information obtained has helped shape the development of Universal Credit. Started a series of events with Local Authorities across Great Britain on Universal Credit business change impacts.

26. Universal Credit – working with HMRC The Programme is working in partnership with HMRC, using their experience and lessons learned from tax credits and knowledge of in-work customers. HMRC is also: Developing new processes and IT to stop tax credits Transferring the HMRC people best suited to help run the new UC service Safeguarding the current service for tax credit customers and considering the implications of UC on wider tax policies and administration. A dedicated ‘HMRC Business Change Team’ has been established in the Programme to ensure the right people from HMRC are involved with the development of UC HMRC RTI and tax credit officials are seconded to the DWP UC Programme to provide tax credit and employer expertise. Joint Ministerial oversight (Lord Freud and David Gauke) and oversight group chaired by Iain Duncan Smith

27. How is the Programme engaging with external organisations? Stakeholder Strategy in place Engagement at different levels Links to appropriate areas within Programmes Includes engagement at: Roundtable Senior Stakeholder Forums Events targeted at areas of design Local engagement with local stakeholders Touchbase e-bulletin

28. Universal Credit Summary and conclusion

29. Conclusion Universal Credit is at the heart of the Government’s welfare reforms – aims to simplify the benefits system and make work pay, while providing support for those who need it. We are making good progress in delivering Universal Credit. We are building a 21st Century benefits system – designed with flexibility and with continuous improvement from the outset. We are designing a service based on claimant journeys – involving them and staff in that design from the outset. We are aware that there are challenges ahead. We are working with our partners and stakeholders, using their specialist knowledge and skills to understand and meet those challenges, so we design and deliver a successful service for our claimants.