Universal Credit Update

Dear Constituents,

Thank you for contacting me about Universal Credit.

Universal Credit (UC) is a major reform that will transform the welfare state in Britain. Understandably, I have received a lot of emails from constituents raising both general and individual concerns about UC. I would like to, therefore, provide you with an overview of the current situation and ongoing plans, and reassure you that the Government is listening and consulting, responding flexibly in a measured way and supporting claimants through the change process at each stage.

At the heart of UC is a belief that work should always pay. Under the new system, benefit will be withdrawn gradually as claimants start work or increase their earnings, meaning their total income always goes up.

I firmly believe that UC is a fair benefit that protects vulnerable claimants. As UC is a simpler, more accurate benefit based on up-to-date information, it will provide people with their full entitlement. This means that 700,000 people will receive on average an extra £285 per month which they have not received under the existing system. Around a million disabled claimants will gain on average £110 a month through UC, because their award is higher through UC than legacy benefits. In the old system it often only made sense to work for no more than 16 hours a week. The legacy system created punitive effective tax rates of over 90 per cent for some, blocking people from receiving a fair income.

Rightly for a programme of this scale, the priority continues to be its safe and secure delivery. The controlled expansion of Universal Credit started in April 2013 and I am pleased that significant progress has been made to date. Universal Credit is now available for single claimants in every jobcentre in the country.

Figures have shown that people claiming Universal Credit are 13 per cent more likely to be in work than people claiming Jobseeker’s Allowance, earning more money and more willing to take a job. People on UC spend around 50 per cent more time looking for a job than they did under JSA. I am glad that 83 per cent of UC claimants are satisfied with the service they receive.

This autumn, the Government will put forward draft Regulations before Parliament regarding the “managed migration” process. The process will start later in 2019 and will be tested and refined before larger volumes start from 2020 until completion in 2023.

The “managed migration” Regulations provide transitional protections for claimants moving from legacy benefits to UC. This means that at the point of moving to Universal Credit, people’s incomes will be protected. This includes support for 500,000 receiving Severe Disability Premium. There will be deliberate flexibility and safeguards built into the process to ensure that vulnerable claimants and those with complex needs are supported throughout. This helps to mitigate a key concern of managed migration, that is, the ability of vulnerable claimants to make a successful claim to UC. Flexibility includes the ability to extend or cancel the date for migration if there is a good reason to do so and to backdate payment should the claimant meet prescribed criteria for not being able to migrate on the date specified by the Department.

The Budget recently announced that an additional £1.7 billion per year is being invested to increase work allowances by £1,000 from April 2019. This means that 2.4 million households will keep an extra £630 of income each year. I believe this will help ensure that work always pays. I was one of 30 conservative MPs asking the chancellor to increase funding to Universal Credit and am delighted that this additional cash has been made available.

The level of support for childcare costs within UC has increased from 70 per cent to 85 per cent, meaning a working family with 2 children can now receive up to £13,000 a year. This support is available to lone parents who are in paid work regardless of the number of hours they work. This helps ensure families with children are not disadvantaged when seeking work or looking to progress in their career, perhaps by taking on more hours. This is part of a wider package of increased childcare provision. This includes an extra 15 hours of free childcare available to working parents of 3 and 4 year olds since September 2017, and the gradual introduction of Tax-Free Childcare for working parents of children aged up to 12 and disabled children aged up to 17.

From April 2017, new Child Tax Credit claims have been limited to the first two children. It is important to support families, but it is also important to be fair to the many working families who do not see their budgets rise when they have more children. This does not apply to Child Benefit. Benefits have also been capped so that no household can receive more in out-of–work benefits than the average working family earns.

From April 2018, claimants already on Housing Benefit will continue to receive their award for the first two weeks of their UC claim. The Government has also promised to make it easier for claimants to request the housing element of their award paid directly to their landlord.

Automatic entitlement to housing support for all 18-21 year olds in Universal Credit will be reinstated to ensure that there are no unintended barriers to young people accessing housing on the basis of their age alone. It is in line with the Government’s launch of the Homelessness Reduction Act and its commitment to eradicating rough sleeping by 2027

Since January 2018, advance payments have increased from a maximum of 50 per cent of a claimant’s monthly entitlement to 100 per cent. The repayment period has increased from 6 months to 12 months. New claimants in December 2017 received an advance of 50 per cent of their monthly entitlement at the beginning of their claim and a second advance to take it up to 100 per cent in the New Year, before their first payment date.

Since February 2018 the seven-day waiting period has been removed so that entitlement to Universal Credit starts on the first day of the application. The Government has stated this will benefit around 750,000 new UC claimants a year by an average of £160 per household. These advances will be available within 5 days of the claim. Advance payment claims will also be able to be made online.

For people with capital exceeding £16,000 who are moved onto UC, any capital which exceeds the limit will be disregarded for 12 months. This will affect around 50,000 people. It has been calculated that approximately 50 per cent have capital greater than £40,000.

UC will help 200,000 more people into work when fully rolled out, and empower people to work an extra 113 million hours a year. As part of this, the Department for Work and Pensions has trialled an in-work service, led by Jobcentre Plus. DWP intends to build on this trial, and the Autumn Budget 2017 committed £8 million over four years from 2018/19 to further develop the evidence base. DWP will also be working in partnership with organisations both inside and outside government to develop evidence about what works to help people earn more and progress in work.

Since 2010, we have seen over 3.3 million people move into work, which is on average 1,000 people each and every day. The majority of jobs created since 2010 are full time, permanent roles that are in higher skilled occupations, which typically bring higher earnings. UK unemployment rate has hit a 43-year low of 4 per cent and youth unemployment has plummeted by over 50 per cent.

The UK saw a seventh month of real terms pay increases, with regular wages up by 3.1 per cent in August, or 0.7 per cent against CPIH inflation and the Government has created more new jobs in the UK since 2010, than France, Spain, Ireland, Netherlands, Austria, Sweden and Norway combined.

Absolute income poverty fell from 22 per cent in 2011/12 to 19 per cent in 2016/17, and relative income poverty had remained relatively stable, according to findings from the Institute for Fiscal Studies report Living standards, poverty and inequality in the UK: 2018 which examined the 15 year period between 2002 and 2017. (IFS, Living standards, poverty and inequality, June 2018 Link).

As part of their ‘testing and learning’ approach, the Department for Work and Pensions (DWP) has been working closely with stakeholders and other parties to design the best possible process for the migration of people from the old benefits system to UC. In recent months, Citizens Advice (CA) and a number of other charities, think tanks and MPs have shared feedback and evidence with the Government.

From April 2019, CA will be delivering a comprehensive and consistent support service, independent of Government, to help ensure everyone can access the support they need and receive timely notification to complete a UC claim – no matter where they live. The network of CA in Eddisbury will be working with local organisations, including Jobcentres and local authorities, to ensure this new service meets the needs of constituents. People will be able to access support online, over the phone and in person. UC Work Coaches will also be fully prepared to ensure that claimants move smoothly onto Universal Credit.

I am delighted that all DWP customer phone services, including UC, are now Freephone numbers. The vast majority of claims are made online, around 99 per cent, and customers can use their online account using free Wi-Fi and computers in all Jobcentres in the country. The Government realise that there are people who still struggle which is why £200 million has been invested in Universal Support, outlined above.

I have visited the local Job Centre and I am closely monitoring local agencies. There are no signs that UC is causing issues for claimants in this area. This area has already seen the introduction of Universal Credit and out of 65000 constituents, less than half a dozen have contacted me with problems with the system, the vast majority of which we have managed to assist and resolve for my constituents. I will be following the “managed migration” process very closely to ensure that people move smoothly into the new system, and I will support improvements when necessary.

Thank you again for taking the time to contact me.