Session 2012-13
HC 576 Progress towards the implementation of Universal Credit
Written evidence submitted by the Department for Work and Pensions
INTRODUCTION
1. Universal Credit aims to tackle the two key problems of poor work incentives and complexity in the current benefits and tax credits system . It will enable the system to help people to move into and progress in work, while supporting the most vulnerable. It will be simple to understand and administer and it will protect both the welfare of those most in need and the public purse. It will be a dynamic benefit, preparing the claimant for work wherever possible.
2. The written evidence provided seeks to address the individual lines of enquiry that the Work and Pensions Select Committee are particularly interested in. This document covers each point of interest in turn.
MIGRATION TO UNIVERSAL CREDIT
3. When a claimant moves to Universal Credit they will bring all members of the household with them. Some claimant details will be carried over, for example claimants will not have to retake a Work Capability Assessment, and similarly a move to Universal Credit will not wipe the slate clean on outstanding debts, fraud penalties, or any waiting periods served to qualify for, for example, Support for Mortgage Interest.
4. The move to Universal Credit can occur in one of three ways:
· a new claim - from households who would otherwise have claimed one of the old working age benefits or Tax Credits;
· a ‘natural’ migration – where a claimant is receiving a current income-replacement benefit but their circumstances change so they would need to claim a different income-replacement benefit or tax credit. They would instead need to make a claim to Universal Credit; or,
· a ‘managed’ move – where the claimant has no change of circumstances, and they are notified that they need to transfer to Universal Credit. If their new Universal Credit award is lower that their total legacy awards, they will be eligible to receive transitional protection.
Pathfinder and Phased Implementation
5. Universal Credit will launch in April 2013 for new claims and natural migrations from a small subset of the unemployed caseload in the North West of England (Tameside, Oldham, Wigan and Warrington). It will enable the Department to test a wide range of capabilities underpinning the end to end service in a live environment, for example:
· the new simpler, single benefit payment service;
· monthly assessment and award;
· some elements of the on-line service;
· the underpinning IT payment service;
· the end to end operational arrangements;
· handling of a range of change of circumstances;
· operational support for the new service;
· the relationships with Local Authorities and third parties;
· operational resilience;
· scaling factors in readiness for regional and national roll-out in October 2013;
· the relationship with Real time information (earnings) from HMRC for those claimants that return to work after April 2013; and
· the new claimant commitment focused on work outcomes.
6. The migration approach for phase one delivery will consist of a targeted take-up across Districts to shut down Job Seekers Allowance (JSA). From October 2013 Universal Credit will be introduced simultaneously across all seven regions (Scotland, Wales, North West England, North East England, Central England, Southern England, London and Home Counties) at a District level. Claimants who have a change of circumstances will also move onto Universal Credit during this phase through natural migration.
7. Phase two will begin from April 2014 where the Department intends to start taking new claims from in-work claimants, for example those who would have previously made a claim to Tax Credits. Universal Credit will also be available to new claimants that are out of work but are not required to actively seek work, such as lone parents with a child under five.
8. Phase three will consist of managed migrations where existing claimants whose circumstances have not changed will be transferred, starting in autumn 2014 to end 2017. The Department is working on the approach as to how this phase will be ordered; with the expectation to start with households with people that are in part-time work or that are economically inactive.
ENTITLEMENT CONDITIONS
9. Universal Credit is an income related benefit for eligible single people and couples with or without children. An eligible adult is one who meets the basic entitlement conditions: to be 18 or over, under state Pension Credit age, in Great Britain , not in education and having accepted a Claimant Commitment.
10. Where the normal entitlement conditions are met there will be no entitlement to Universal Credit where a person is: a member of a religious order fully maintained by their order; a prisoner (except to the extent that support is provided for a temporary period for housing costs); or serving a sentence of imprisonment and detained in hospital.
11. Exceptions will apply to the basic conditions of entitlement as outlined below.
Young People
12. There are five categories of people aged 16 and 17 that will be able to get Universal Credit in their own right:
· those with dependent children - lone parents or couples;
· sick or disabled young people who have satisfied the Work Capability Assessment or are waiting to be assessed with medical evidence;
· those who are caring for a severely disabled person;
· pregnant whether living with their parents or not; and
· young people who are estranged from and cannot live with parents.
13. Young persons without parental support may be in non-advanced education, training or work. For other groups of eligible 16 and 17 year-olds, entitlement is subject to the rules on education.
Education
14. T he following groups of full time students in advanced and non-advanced education are treated as eligible for Universal Credit:
· students with relevant dependent children or young persons (including lone parents, a member of a couple who are both students and a couple where only one of them is a student);
· students who are foster parents;
· disabled students who are single or where they are part of a couple and one or both of them is disabled;
· students in couples where the other eligible adult is entitled to Universal Credit, i.e. where there are no children;
· students over the qualifying age for Pension Credit (in couple cases where one is over and one under that age); and
· for non-advanced education only, a young person without parental support (definition as for lower age limit exception) will be able to qualify up to age 21 or the end of the academic year in which they reach age 21 (or the end of the course if earlier).
People from Abroad
15. Entitlement to Universal Credit is based on a person living in Great Britain . A person meets this condition if they are present in Great Britain , have a right to reside, and are habitually resident in the United Kingdom , the Channel Islands , Isle of Man , or the Republic of Ireland (known as the ‘Common Travel Area’).
16. EU claimants who come to the UK to seek work and those who retain worker status because they become unemployed only have a "right to reside" if they are seeking work. Any such claimants who are not seeking work will not be entitled to Universal Credit.
Temporary absence
17. In certain circumstances claimants will still be eligible for Universal Credit if the nature of their work means they are temporarily absent from Great Britain , for example airmen, continental shelf workers, mariners and armed forces personnel.
18. Where Universal Credit is in payment, a temporary period of absence abroad will be allowed for up to one month for any reason e.g. holiday, visiting relatives; or a longer period of up to six months for reasons of medical treatment.
19. Furthermore, the housing element of Universal Credit will be protected for up to six months where a claimant is imprisoned or taken into care.
20. Other forms of temporary absence would not generally make a person ineligible for Universal Credit, but can impact on the status of the household for Universal Credit purposes. Where an adult or child is temporarily absent from their household because they are in a residential institution, for example hospital or care home then up to six months temporary absence would be permissible and Universal Credit would be paid as if the adult or child what still in the household. After this point the person will no longer be treated as part of the household.
CLAIMS AND PAYMENTS AND THE PROVISION OF SUPPORT AND ADVICE FOR CLAIMANTS
Payment of Awards
21. Universal Credit will be paid on a calendar monthly basis in a single payment to reflect the fact that 70 per cent of people in work are paid wages in this way.
22. This will enable low-income households to develop a greater responsibility for managing their household budget and support their transition into work.
23. Paying Universal Credit on a monthly basis will make it easier for households to take advantage of cheaper tariffs for essential costs such as utility bills. Increased financial responsibility will also allow households to improve their access to affordable credit.
Bank Accounts and Alternative Financial Products
24. Some claimants currently do not have access to a mainstream bank account. Work is underway with a range of banking and financial product providers to make financial services more accessible and supportive to low-income households.
25. Options are being explored for supporting claimants to access accounts or alternative financial products with additional budgeting functionalities, such as 'jam jar' accounts.
26. The Department for work and Pensions are continuing to work closely with high street banks through the British Bankers’ Association to explore these options, whilst also working with providers of alternative financial products such as credit unions, prepaid cards and other new and emerging financial providers.
Personal Budgeting Support
27. It is recognised that some claimants may need additional help to budget, particularly during the transitional period from the current system to Universal Credit. Work is underway with the advice sector to ensure that claimants are able to access appropriate budgeting support services to enable them to manage their money successfully.
28. For some claimants an alternative payment arrangement may be needed to support them in the move to Universal Credit; this could be a more frequent payment than monthly, a split payment within the household or payment of housing costs made directly to the landlord.
29. The Government sees this as being time-limited and would look to put in place the appropriate support to help them eventually make the transition to the standard monthly payment.
Direct Payments and Personal Budgeting Support
30. In June 2012 the Government set up a series of Housing Demonstration Projects in order to assess the impact of paying housing benefit directly to the tenants. The projects will give the Department the opportunity to test the support required in order to: help claimants’ budget and manage their rent payments effectively, test what safeguards need to be in place to protect the landlords' revenue streams, and consider those claimants who may be unable to manage the change to direct payments (both from the outset of Universal Credit and once established on the benefit). These projects will also be used an opportunity to explore what types of budgeting products can be used to support Universal Credit claimants in the longer term.
31. The Department understands that many people on low incomes are used to budgeting on a fortnightly basis and may be concerned about moving to monthly payment. There will be appropriate budgeting support to ensure recipients are supported effectively. The Department is examining a range of options to support claimants as part of the move to Universal Credit and is carefully considering the welfare implications involved.
32. The Government wants families to be able to manage their affairs in a manner that best reflects the demands of modern life, whether in or out of work.
Payment Exceptions
33. Exceptions to payments being made directly to the household are not detailed in Regulations, but will be in guidance. Formal guidance relating to payment exceptions will be shared in the winter of 2012.
34. Guidance will encompass rent payments made directly to the landlord, making payment more frequently than monthly and the provision of split payments. Intrinsic to this guidance, will be an overview of the circumstances in which any/all of the payment exceptions could be considered.
Universal Credit Online Service – Digital by Default
35. Universal Credit will be digital by default in line with a wider Government agenda of making services more efficient by putting them, where appropriate, online. This will mean a significant saving as every 5 per cent of transactions through self service, achieves efficiencies of circa £5m per annum.
36. The design of the Universal Credit experience will be compelling and as easy to use as possible so that it is an attractive proposition for claimants. In line with the objectives of Universal Credit, claimants are at the heart of the service and it is designed to put them in control of their circumstances.
37. Digital capability of claimants is an important factor for Universal Credit and claimants with good digital skills will be able to access more job vacancies, helping them back to work. Digital skills are a factor in around 72 per cent of jobs.
38. Universal Credit makes more claimants employable and better able to get jobs. Over eight million people in the UK don’t use a computer, and 38 per cent of these are unemployed. People without digital skills are likely to earn 10 per cent less than people with digital skills and miss out on job vacancies advertised by 25 per cent of employers who advertise online only.
39. People with poor digital skills are excluded from the 72 per cent of jobs that require IT skills. In addition, people who do not transact online are missing out on up to £560 of consumer savings per year through, for example, securing cheaper utility deals & insurances.
40. Getting Universal Credit claimants to transact online will bring transformational benefits to their quality of life and help them become socially and financially included in today’s digital world. Universal Credit supports households and claimants to become independent, socially included and productive.
How Digital by Default will be Achieved
41. In order to achieve the Government’s aim of Digital by Default, the Department has developed a high quality of service design, working with claimants to design a user driven service.
42. A key focus within this development is helping to get the offline, online, and the Department has been working across government joining up efforts and initiatives and working with digital champions.
43. Universal Credit will be supplemented by a number of alternative channels to support the online service including: telephony assisted telephony, agent-led and high street channels. All of these alternative channels are designed to support claimants to claim Universal Credit online and support them to stay online.
Universal Credit Face-to-Face Services
44. The Government recognises that there will continue to be some claimants who cannot use digital online services. For those claimants with complex circumstances or with particular needs, alternative access routes will be offered along with needs based support to access online services, including support in a face-to-face environment.
45. Claimants will be supported to use other channels as soon as it is practical to do so and providers of the Universal Credit face-to-face channel must be advocates of the digital online service.
46. From 2013, Universal Credit face-to-face will include work services provided by Jobcentre Plus and Welfare to Work Programme providers. Other requirements for face-to-face services, particularly for people with high-support needs, will use the best of local capabilities. All services will be delivered by the Department for Work and Pensions and its delivery partners, including local authorities and their wider supply chains.
47. Local Authorities already play an important part in supporting people who need additional help to access services, and will have an important role to play in the delivery of Universal Credit. The Department will continue to work with Local Authorities to ensure the right level of support is available to claimants in their local area when they move onto Universal Credit.
48. An internal National Service Framework is in development to articulate the required services to deliver the face-to-face strategy. This framework will be used as a set of guidelines to help the Department work collaboratively with local authorities as plans for local service provision are developed.
PROGRESS DEVELOPING THE NECESSARY IT SYSTEMS TO ADMINISTER UNIVERSAL CREDIT
49. The pathfinder in April 2013 will prove the core Universal Credit policy and supporting processes, some of which will be automated, including an on-line claiming process. The design for these IT systems is now in its closing stages, with the build plan on track to complete at the end of October 2012
50. Rigorous, integrated IT testing has also commenced and will continue until February 2013, bringing together Universal Credit and the various external system changes, such as the Real Time Information system. There will be a number of Service Tests which will involve claimants throughout this period.
51. October 2013 will see us start to roll out this core Universal Credit service incrementally in each region of Great Britain. It will also see us deploy the next series of functionality and processes in to the pathfinder sites. Early scoping and high level design work has now started on this, which will focus on the delivering digital (by default) processes. The programme will continue to build iteratively the functional capability to add automation and integration through to October 2015 and beyond.
52. There will be robust standby arrangements which will enable the IT system to be fully recovered within a short period of time. These standby arrangements will cater for both failures within the Universal Credit IT System and possible catastrophic outage of infrastructure (i.e. Data Centre outage).
53. The Department for Work and Pensions is recognised as having some of the best contingency arrangements in place across Government. Should there be a catastrophic outage of IT; arrangements are in place that can be invoked to ensure people continue to get their money.
54. Existing contingencies are regularly reviewed to ensure they can be strengthened and to identify where new contingencies may need to be developed so people continue to receive the best service possible. Contingency arrangements are being considered to ensure that no one will lose money when there is a disruption to on-line service. Whether claims can be made and progressed through our other secondary channels such as telephony and face to face is being examined as part of the in-depth analysis currently being undertaken.
Real Time Information
55. PAYE Real Time Information is a major Government initiative that will ensure the PAYE system meets the needs of the 21st century. PAYE Real Time Information will improve the operation of Pay As You Earn for employers, HMRC and individuals. It is estimated that RTI will deliver c£300 million net reduction in administrative burdens for employers. PAYE reporting in real time will also support the introduction of Universal Credit.
56. The underlying process for PAYE remains unchanged, but Real Time Information fundamentally changes the way in which employers & pension providers report information to HMRC and the frequency of those reports. Information will be reported at the time a payment is made as part of the routine payroll operation, rather than at the end of the year. Additionally, the reporting of new employees and those who have left employment will be reported as part of the routine payroll function rather than a separate activity.
57. A pilot started in April 2012 to test the Real Time Information service and the IT and identify any issues which need to be resolved before most employers start submitting PAYE in real time in April 2013. The pilot is going very well and as a result Real Time Information is on track. So far there have been few issues and those that have occurred have been quickly resolved with ten volunteer employers. It was expanded on schedule in May to a further 310 PAYE schemes. Following the success of the first pilot stage, HMRC expanded the pilot again and by end July almost 1.8 million individual records were being reported in real time by 700 PAYE schemes.
58. The quality of data in the pilot has been good, with the numbers of individual records matching to a National Insurance number exceeding expectations. Where a PAYE scheme pays using Bacs, HMRC uses an automated cross referencing process to match the amounts shown on the RTI return with the amount actually paid. This process is producing high rates of matching.
59. HMRC is on track for around 1,300 schemes to be reporting PAYE in real time by the end of September and a further expansion in November. By March 2013 around 6 million individual records will be reported in real time by up to 250,000 PAYE schemes.
60. HMRC are seeing external confidence in the pilot and have therefore offered more large employers, payroll bureaux, new employers and software developers the opportunity to join the pilot or to expand existing involvement in advance of the launch date of April 2013. This approach will bring more individuals into RTI, ensuring HMRC is well placed to support the early stages of Universal Credit including Pathfinder when it starts in April 2013.
61. The remaining employers and pension providers will come on board from April 2013. HMRC are on track to have all employers and pension providers reporting PAYE in real time by October 2013 – in time for the introduction of Universal Credit.
Contingency for RTI
62. Critical Failure Impact Analysis is under way for the complete service chain for Universal Credit, including systems already operating within the Department for Work and Pensions environment, and those operating within other departments. This analysis will identify areas of vulnerability and recommend action in any area where risk of failure is identified.
THE CLAIMANT COMMITMENT, SANCTIONS AND HARDSHIP PAYMENTS
Claimant Commitment
63. To be entitled to Universal Credit, claimants must normally accept a Claimant Commitment. The initial Claimant Commitment will either be accepted as part of the normal claims process or, for people expected to search for work, will be drawn up during a face-to-face discussion. It will clearly record the expectations placed upon a claimant and the consequences of any failure to comply and will be amended on an ongoing basis.
64. If a claimant refuses to accept a Claimant Commitment they will not be entitled to Universal Credit. As Universal Credit is a household benefit any claim from a partner in the household will also end. Claimants who refuse to accept the Claimant Commitment will be allowed a ‘cooling off’ period to reconsider their decision. They will also be able to ask for another adviser to reconsider the requirements within it.
Claimant Responsibilities
65. The Government expects Universal Credit claimants to do all they reasonably can to establish an adequate level of earnings. There are four basic types of work related requirement that can be imposed and recorded in the Claimant Commitment.
· Work-focused interviews
· Work preparation
· Work search
· Work availability
66. The requirements imposed on any individual will depend on the claimant’s capability and circumstance. Claimants will fall into one of the following conditionality groups:
· No Work Related Requirements. This group for claimants who cannot work or prepare for work or if they are already earning above their conditionality threshold.
· Work Focused Interviews Only. This group is for claimants expected to stay in touch with the labour market and begin thinking about a move into work, more work, or better paid work.
· Work Preparation. This group is for claimants not expected to look for work but expected to prepare for a move into work, for example, participating in the Work Programme.
· All Work Related Requirements. This group is for claimants expected to move into work, or increase their earnings.
67. Claimants in the All Work Related Requirements group will normally be expected to meet work search and work availability requirements. However, the specific work (such as the type of employment and the hours of work) that a claimant is required to look and be available for will be tailored to the individual.
68. The application of all other requirements is discretionary. Therefore, as well as supporting the personalisation of requirements, the legislation provides for considerable flexibility as to what regime is put in place.
No Work Related Requirements Group
69. Claimants are placed in this group if they cannot work or prepare for work over a sustained period, or if they are already earning above their conditionality threshold. Claimants will include people who have caring responsibilities of at least 35 hours a week for a severely disabled person, lone parents with a child aged under one, and claimants who have been assessed as having a limited capability for work and work related activity.
70. The conditionality threshold is calculated based on the claimant’s circumstances, but the principle which underpins this is that conditionality requirements will not be applied where an individual or benefit unit is already earning all we could reasonably expect. This will be determined by establishing the number of hours the claimant can reasonably be expected to work (for threshold purposes this will be set at a maximum of 35 hours a week but adapted according to individual’s circumstances) and multiplying this by the relevant national minimum wage for the age of the claimant.
Work Focused Interviews Only Group
71. Claimants whose only requirement is to stay in touch with the labour market will attend work focused interviews. They will not be required to apply for, or take up, a job or engage in work preparation activity. These claimants will include:
a. the responsible carer of a child between one and five years old ;
b. a lone or nominated foster carer for a foster child under 16, or 18 if the child has proven care needs; and
c. relatives or others who are responsible carers of a child who cannot live with their parents.
Work Preparation Group
72. Claimants in this group will be expected to prepare for a move into work but will not be required to take steps to apply for or take up work as a condition of their claim. This includes claimants who are assessed as having a limited capability for work but not a limited capability for work related activity.
All Work Related Requirements Group
73. This will be the default group for all claimants unless they fall into one of the other groups. Wherever a claimant is capable of work or of working more, they will be expected to take all reasonable steps to find and obtain work or more work or better paid work. Claimants will usually be expected to look for and be available for full time work and of any type. However, where appropriate given the claimant’s circumstances and capability, this will be restricted such as limiting work search and availability to certain types of job or certain hours of work. For example where a claimant is a carer or has young children of school age. The claimant may also restrict availability for three months to a particular occupation and/or level of pay in line with current or previous work as long as they have a reasonable prospect of getting such a job.
Meeting Work Search and Work Availability Requirements
74. In order to meet a given work availability requirement, claimants must normally be available to immediately take up (or attend an interview for) work and do all they reasonably can to give themselves the best prospects of moving into work. In line with this, claimants will be expected to have spent up to 35 hours a week (or their agreed number of hours, if less) looking or preparing for work.
Claimants in Work
75. Universal Credit is designed to support people who are both in and out of work, and in particular to encourage and support those doing some work to progress and earn more in order to support themselves and their family. A number of features within Universal Credit come together to encourage this – especially the disregards and single taper rate; however it is understood that the work-related conditions applied can also be important. Traditionally, the ‘conditionality’ regime in the benefits system has aimed mostly to move people from no work into employment. At the launch of Universal Credit, this is where the Department will continue to focus its efforts in terms of conditionality. However, it is looking to do more and will be exploring options with a view to carrying out pilots in the future.
Sanctions
76. Sections 26 and 27 of the Welfare Reform Act 2012 (March 2012) provide for sanctions to be imposed on Universal Credit claimants who fail to meet conditionality requirements without a good reason.
77. Sanctions play an important role in underpinning this conditionality by encouraging claimants to meet the requirements that will help them, where it is appropriate, to move into or prepare for work. The sanctions regime is designed to drive engagement with requirements by providing:
a. clarity about the consequences of non compliance;
b. a clear and robust deterrent against non compliance; and
c. tougher and clearer sanctions for repeated non-compliance.
78. In Universal Credit, there will be four levels of sanction. The table below summarises these. The level of sanction will depend on the conditionality group a person falls into. Claimants over 18 subject to high, medium and low level sanctions will be sanctioned an amount equivalent to the relevant Universal Credit standard allowance. Claimants subject to lowest level sanctions will be sanctioned an amount equivalent to 40 per cent of the Universal Credit standard allowance.
Sanction Levels for claimants aged over 18
|
Applicable to |
Duration |
|||
|
Sanction Level / reason |
1st failure |
2nd failure |
3rd or subsequent |
|
|
High Level e.g. failure to take up an offer of paid work |
Claimants subject to all work-related requirements |
91 days (3 months) |
182 days (6 months) |
1,095 days (3 years) |
|
Medium Level e.g. failure to undertake all reasonable action to obtain work |
Claimants subject to all work-related requirements |
28 days (4 weeks) |
91 days (3 months) |
|
|
Low Level e.g. failure to undertake particular, specified work preparation action |
Claimants subject to all work-related requirements Claimants subject to work preparation and work-focused interview requirements |
Open ended, until re-engagement, plus |
||
|
7 days (1 week) |
14 days (2 weeks) |
28 days (4 weeks) |
||
|
Lowest Level Failure to participate in a work-focused interview |
Claimants subject to work-focused interview requirements only |
Open-ended until re-engagement |
||
Imposing a sanction
79. High-level sanctions will apply to claimants within the All Work Related Requirements conditionality group. These sanctions will be imposed for failure to meet the most important requirements, such as failure to apply for a particular vacancy without good reason or failure to take up an offer of paid work without good reason.
80. Medium-level sanctions may be imposed on claimants subject to all work- related requirements. These sanctions will apply when a claimant fails to undertake all reasonable work search action or fails without good reason to be able and willing immediately to take up work.
81. Low-level sanctions will apply to claimants subject to all work-related requirements or work–preparation and work-focused interview requirements. They may be imposed for failure to comply with requirements which are designed to help the move into or prepare for work without good reason. The sanction will be open-ended until a claimant has re-engaged after their failure, followed by a short fixed period sanction.
82. Lowest level sanctions will apply where claimants subject to work-focused interview requirements only, fail to participate in a work-focused interview without good reason. The sanction will be open ended. It will end when a claimant meets a compliance condition such as attending a rearranged interview (or the award is terminated).
Cumulative Approach
83. The sanctions approach will be cumulative. This means that where a claimant subject to one sanction receives another, the period of the second sanction would be added to first. Claimants’ award amounts will be reduced for the entire duration of both sanctions.
16 and 17 Year-Olds
84. Certain 16 – 17-year-olds will be able to claim Universal Credit in their own right and could fall into any one of the conditionality groups depending on their circumstances. A sanctions regime which is specific to this claimant group will apply, mirroring the structure of the adult regime but with lower sanction amounts and shorter durations as set out in the table below. Sanction amounts will be 40 per cent of the standard allowance for 16 – 17-year-olds.
|
Sanction level |
Duration |
|
|
First failure |
Second failure |
|
|
Higher |
14 days (2 weeks) |
28 days (4 weeks) |
|
Medium |
7 days (1 week) |
14 days (2 weeks) |
|
Lower |
Open-ended |
Open-ended +7 days |
|
Lowest level (claimants subject to work-focused interview requirements only) |
Open-ended |
Open-ended |
85. The requirements placed on claimants will be reasonable, taking into account capability and circumstances, such as health conditions and caring responsibilities.
86.
Sanctions will not be applied if a claimant can show good reason for non compliance. When decision makers are deciding whether to impose a sanction they must consider all evidence and information the claimant presents for that failure.
87.
The Department will continue to contact claimants with a limited capability for work and a mental health condition or learning disability before determining whether a sanction should be applied. This contact will inform the decision on whether there was a good reason for the failure.
88. Claimants will be able to appeal any decision to reduce their benefit to the First Tier Tribunal, but only after they have first asked the Department to reconsider that decision. They must seek reconsideration within one month of being notified of the decision to sanction, or within up to 13 months if there are exceptional circumstances which the Decision Maker deems it reasonable to accept. The appeal must be lodged within one month of being notified of the outcome of the reconsideration.
89. Section 28 of the Welfare Reform Act 2012 (March 2012) allows for additional payments of Universal Credit to be made where the claimants’ award has been reduced as a result of a conditionality sanction and the claimant is or will be in hardship. Regulations make provision as to when a claimant is to be treated as being, or not being, in hardship.
Conditions for Hardship Payments
90. A hardship payment will be made to a claimant, who complies with their work search and preparation activities, and who can demonstrate that as a result of the sanction they cannot meet their household’s basic and essential needs in respect of accommodation, heating, food or hygiene because of the imposition of a sanction.
91. To be eligible for hardship payments, claimants will need to demonstrate they are doing everything reasonably possible to access and rely on alternative sources of support and have made every effort to reduce non-essential expenditure. This requirement ensures that claimants act responsibly with the resources that are available to them and focuses those resources on the essential needs for their family.
92. Hardship payments in Universal Credit will only be available to those who have complied with their individual work search or work preparation requirements in the seven days previous to making their hardship application. They will be expected to continue making every effort to find or prepare for work to be entitled to hardship payments. This provides a continuing incentive to prepare for or to look for work.
Recovery of Hardship Payments
93. The Department will recover hardship payments made to claimants once the duration of a sanction is completed. A claimant or both claimants in a household must accept that hardship payments will be recoverable before any application can be considered. Recovery of hardship will be suspended if the claimant is in work and earning above their conditionality threshold. Once they have been in such work for six months, the outstanding balance will be written-off. Hardship payments cease to be recoverable where the claimant has been in paid work at or above the conditionality threshold for 182 days
Period of Hardship
94. Where a Decision Maker accepts the claimant meets the conditions for a hardship payment, the period of payment will be from the date of application to the date prior to when the next payment of Universal Credit is due.
Amount of Hardship
95. Hardship will be paid at a rate of 60 per cent of the daily amount by which the sanction reduced the claimant’s Universal Credit payment. Hardship payments will not be accessible for 16 – 17-year-olds as sanction reductions will be made at 40 per cent of their standard allowance, compared to 100 per cent for those aged 18 and over.
CHANGES IN THE INCOME ENTITLEMENT OF DISABLED PEOPLE UNDER UNIVERSAL CREDIT
Policy Rationale
96. Under Universal Credit the Department for Work and Pensions wants to: encourage disabled people and those with health conditions to work where this is realistic for them; to target financial support on those who have the most severe disabilities or health conditions (including children with the most severe disabilities), and to simplify and rationalise the current complex and confusing system.
Work Support
97. Complex ‘Permitted Work’ rules will be replaced with work incentives for disabled people via Universal Credit’s flat taper rate topped up by a generous earnings disregard. The additions will be available to people both in and out of work, thus strengthening the incentives for disabled people to move into work. They will be provided with the right help including personalising back to work support, where there is a temporary fluctuation in a health condition which will see advisors being able to limit the type and amount of work-search activity required, taking into account the claimant’s health.
Targeted financial support
98. It is intended that people who are assessed as having limited capability for work, or limited capability for work-related activity, should be provided with more support to reflect the extra costs of having on average longer durations on benefit. There will be two additions based on a single assessment: a higher addition for those with limited capability for work and work-related activity; and a lower addition for those with limited work related activity.
99. Savings achieved by these reforms through abolishing the severe disability premiums, will be used to target payments to those in greatest need by enabling a significant increase in the higher addition. There will be no direct passporting from Disability Living Allowance/Personal Independence Payments (except for children) so entitlement to an additional element within Universal Credit will only be for those who have limited capability for work or limited capability for work and work-related activity.
100. Claimants will qualify for either a disability or carer element not both, removing the current overlapping of provision that allows people to simultaneously claim an addition by virtue of a medical condition and a carer element for themselves. However, as now, couples could get a disability addition for one member and the carer element for the other partner.
101. While many people will benefit from Universal Credit, transitional protection will apply to current claimants so that there will be no cash losers as a direct result of the move to Universal Credit where circumstances remain the same.
Simplification of the current system
102. There are currently seven different components of benefits and tax credits associated with disability within the present system. These are paid at different rates, have different qualifying conditions and different purposes. The intent is to simplify the existing system, abolishing the array of multiple overlapping benefits and severe disability premiums.
103. Universal Credit will not replicate every aspect of the current provision but will consist of elements for disabled people based on limited capability for work, similar to existing arrangements for Employment and Support Allowance.
104. The Department knows that many disabled people want to work but feel the risk of losing their benefits is too great. The simplified structure of a system of tailored earnings disregards and single taper of Universal Credit will provide greater certainty and reward people for taking the step into employment. This reflects the Government’s strong commitment to help more disabled people into work.
105. It is estimated that around 300,000 households will gain from the disability reforms and around 300,000 households will receive less, although benefit entitlement for a household may be affected by other parts of Universal Credit meaning an overall increase. Where current claimants receive less as part of Universal Credit, then transitional protection will be applied at the point of change, as long as circumstances have remained the same.
Disabled Child Addition
106. In Universal Credit, the costs associated with having a child will be met through the child element, with the extra costs associated with having a disabled child met through the disabled child addition to the child element.
107. There are to be two rates of disabled child additions as follows:
· a disabled child addition for a child who receives any rate or component of DLA/PIP, apart from the highest rate of the care component; or
· a severely disabled child addition for a child who either receives the highest rate of the care component of DLA/PIP or is registered blind.
108. In Universal Credit, disabled child payments will be aligned with those paid to disabled adults. Aligning the child and adult rates removes the cliff edge in the current system and will make it easier for young people who go to claim as disabled adults to have a planned transition into independence.
109. The lower rate for both adults and children will be set at around £117 per month and the upper rate for adults will increase in stages over time to around £333 per month. The rate for the severely disabled children will be set at around £333 per month when Universal Credit is introduced.
110. As a consequence, some families with a disabled child may be entitled to lower amounts under Universal Credit than they currently receive. This applies to the approximately 170,000 disabled children currently receiving the disabled child element, but not the severely disabled child element of Child Tax Credit.
111. However, some of these families may benefit overall from Universal Credit and there will be transitional protection at the point of change for existing claimants who see a lower entitlement under Universal Credit where their circumstances remain unchanged.
112. The Government has announced its commitment to undertake a review of the gateway which links disabled children to the Universal Credit disability additions. The exact details of the review are still to be determined. However, the Department will work with disabled people and disability organisations during the review to ensure that the most severely disabled children receive the support they need when the review is complete.
THE IMPACT OF THE CHANGES ON LOCAL AUTHORITIES
113. Local Authorities are fully engaged at all levels in the design, development and implementation of Universal Credit. They are playing a full and active part in steering the programme and ensuring their respective organisations are represented across the Programme's key governance groups.
114. The programme has begun to engage all Local Authorities in respect of their detailed plans for Universal Credit related business change and is sharing thinking on migration proposals through Local Authority engagement forums. Plans are being put in place to ensure the migration schedule will be reviewed regularly to ensure it is flexible enough to adapt to changing national and local circumstances over what will be a lengthy period of transition
Role and Funding of Local Authorities
115. L ocal Authorities will have a continuing role in providing face to face support to claimants who need additional help from October 2013 and they will continue administering Housing Benefit until all claimants have migrated onto Universal Credit. As a result , the Local Authority role after 2013 is a complex and multi-faceted one, and the scope for new and innovative approached to delivery is considerable. So for Local Authorities overall, future funding requirements are difficult to define at this time .
116. A letter from the Department to Local Authorities has made it clear that they need to retain enough capacity to continue to manage the Housing Benefit caseload prior to full migration to U niversal C redit . L ocal Authorities in England , Scotland and Wales will continue to receive subsidy from the Department in respect of their continuing but gradually diminishing H ousing Benefit adm inistration costs after 2013.
117. The su bsidy allocation statements by the Department for Work and Pensions and the D epartment for Communities and Local Government this coming autumn w ill give details of funding to Local A uthorities in England for supporting the transition process .
118. L ocal Authorities will continue to have a significant role in delivery of other welfare services after 2013 (Local Council Tax Support , reformed Social Fund, D iscretionary H ousing P ayments and residual housing costs) and central funding a rrangements will reflect this, including where L ocal Authorities have a role in delivery of U niversal Credit .
119. The Department for Communities and Local Government will be responsible for subsidy allocations to English L ocal Authorities in respect of L ocal Council Tax Support administration costs but subsidy allocations in Scotland and Wales will be matters for the Scottish and Welsh Governments .
120. It is recognised that Local Authorities may incur one-off costs associated with decommissioning Housing Benefit services and work is underway to understand these impacts so that the Department can meet its obligations under New Burdens Doctrine. Work is also underway to identify the costs and additional burdens on Local Authorities of the Benefit Cap and funding allocations will reflect that.
Implications for Local Authority staff
121. The Department is working with Local Authorities to understand the full implications of the transfer of Housing Benefit administration to Universal Credit. The specific implications this has for LA staff cannot be fully understood until the design of the Universal Credit service is finalised, along with that of the wider Welfare Reform changes, including the localisation of Council Tax support and elements of the Social Fund.
122. It is still too early to say how many staff and what skills and experience will be required for Universal Credit. However on the 21st March 2012 the Permanent Secretaries of the Department for Work and Pensions and the Department for Communities and Local Government wrote to Local Authority Chief Executives informing them that Local Authorities will be expected to provide face to face support for some Universal Credit claimants who will need more intensive help to access the online system.
123. It will be important to retain enough capacity to provide face to face support to claimants with complex needs when planning to reduce benefits services. Capacity will also be required to maintain the Housing Benefit caseload prior to full migration, deliver localised Council Tax Support and, in England, to take on some aspects of the current Discretionary Social Fund.
124. It is anticipated that longer term, fewer staff will be required to deliver Universal Credit compared with legacy benefits so it is expected that staff in each of the current organisations will be affected. The impact on the number of Local authority staff will also be affected by the design of the Council Tax Benefit replacement, the social fund reforms, the introduction of the Benefit Cap and decisions about the delivery model for Universal Credit.
Support for Universal Credit claimants
125. There will continue to be some claimants who cannot use digital online services. For those claimants with complex circumstances or with particular needs alternative access routes will be offered along with needs based support to access online services, this includes support in a face to face environment.
126. Claimants will be supported to use other channels as soon as it is practical to do so and providers of the Universal Credit face to face channel must be advocates for digital online service. Face to face services will be delivered by the Department for Work and Pensions and delivery partners, including Local authorities and their wider supply chains to ensure the best of local capabilities are utilised.
127. Local Authorities already play an important part in supporting people who need additional help to access services, and will have an important role to play in the delivery of Universal Credit. The Department continues to work with Local Authorities to ensure the right level of support is available to claimants in their local area when they move onto Universal Credit.
128. A National Service Framework is in development to articulate the required services to deliver the face to face strategy. This framework will be used as a set of guidelines to help the Department work collaboratively with Local Authorities as the detail of local service provision is planned.
Support for claimants affected by the Benefit Cap
129. The Department for Work and Pensions and Local Authorities are working to provide support to claimants affected by the Benefit Cap. This includes employment support provided by Jobcentre Plus and support with housing from the Local Authorities. Claimants likely to be affected by the cap are being encouraged to accept employment support with a view to finding work and claiming Tax Credits, as those in receipt of Working Tax Credits are exempt from the Benefit Cap.
130. Guidance is being issued to staff and locally Jobcentre Plus and Local Authorities are being encouraged to work together to ensure joined-up support for claimants. An assurance process is being put in place to ensure this happens.
Local Authority-led pilots
131. The Local Authory led pilots will commence in Autumn 2012 and are expected to run until September 2013. The pilots will focus on delivering the face to face support some people may need to make claims for Universal Credit, including online support, help with budgeting and job searches, reducing fraud and error, and reducing homelessness. Local Authorities will play an important role in providing that support and these pilots create an opportunity for them to be at the forefront of shaping that role working with the Department and other partners.
132. The Department for Work and Pensions and the Local Authority associations for England, Scotland and Wales each jointly developed a prospectus defining the scope of 2013 focus Local Authority led pilots in their own nations. The prospectuses invited bids for pilots to explore key aspects of Universal Credit face to face delivery, including financial independence via a greater focus on work. These have generated and an announcement about the successful applicants in each nation is expected shortly.
133. The pilots will test and inform implications for Universal Credit design and rollout and support Local Authorities in their planning for Universal Credit delivery. The results will demonstrate progress and test the benefits, costs and outcomes of pilot activity. Further pilots covering LA long-term role in the delivery of Universal Credit will be announced next year and will examine post 2015 delivery models.
THE LEVEL OF THE EARNINGS DISREGARD
134. Universal Credit intends to top up earnings in a way that will make sure that there is a clear financial gain from working. It will provide a new single system of means-tested support for working-age people whether they are in or out of work. This will reduce the risks associated with moves into employment that exist in the current system .
135. In particular Universal Credit aims to ensure that people are encouraged to take jobs of only a few hours if that is all that is possible for them. To achieve this, members of a household will be allowed to earn some money before it has any impact on the amount of Universal Credit received – this amount is called an earnings disregard. Different amounts will be disregarded from earnings in order to reflect the needs of different types of household and to support the aim that work pays.
136. In addition there will be a single taper rate at which benefit is reduced to take account of earnings over the relevant disregard level. This will allow people in work to see clearly how much support they can get while making sure that people considering a job will understand the advantages of work. This also reduces the risks of moves into employment that currently exist within the current system.
137. The rates of the earning disregard are still to be finalised but will be set in line with Government spending commitments.
ELIGIBILITY FOR AND OPERATION OF PASSPORTED BENEFITS
138. In May 2011 the Department for Work and Pensions commissioned the Social Security Advisory Committee (SSAC) to undertake an independent review of passported benefits and to provide advice on the possible approaches to the provision of these benefits when Universal Credit is introduced in 2013. The SSAC report and the Government response were published in March 2012.
139. In its response the Government noted that the SSAC’s report into passported benefits supported the Government’s view that many of these benefits provide vital support to people on low incomes and are valued highly by the individuals that receive them.
140. The introduction of Universal Credit represents not only a challenge for Departments and organisations with responsibility for passported benefits, but also a unique opportunity to consider more fundamental reform to simplify and streamline some passported benefits in future.
141. The Department for Work and Pensions continues to work closely with those Government Departments responsible for passported benefits as well as the Devolved Administrations and other providers as they develop their thinking around new eligibility criteria. Organisations will need to deliver the new criteria within the financial limits of individual schemes and to deliver well targeted, effective schemes with particular regard to the financial climate.
142. Work is under way to determine how this will work but essentially Universal Credit will provide the earnings level to Government Departments, as a proxy equivalent of current eligibility criteria, and it will be up to each passported benefit to decide their criteria based on their rules and budget.
143. Many passported benefits, and their associated administrative functions, have been in place for many years and in some cases, modernisation is long overdue. The Government recognises that, given the legislative and administrative change that would be required, radical reform of passported benefits may not be achievable for the initial stages of Universal Credit and the immediate priority is to introduce Universal Credit in a way that works smoothly with all passported benefits.
144. The provision of some passported benefits to all recipients of Universal Credit would almost treble the numbers currently eligible. Although the Government is sympathetic to the arguments for extending eligibility this is simply unaffordable in the current economic climate.
IMPACT MONITORING
145. To support effective delivery and a smooth transition, a framework to monitor and evaluate the impact of Universal Credit is being developed. This will encompass initial policy and process preparation through to the Pathfinder and will continue through to national roll-out of Universal Credit. Throughout, the focus will be on ensuring delivery supports the core aims of Universal Credit to: improve work incentives; smooth the transitions into and out of work; simplify the benefits system; reduce in-work poverty; reduce fraud and error.
146. To support initial preparation and transition through to Universal Credit a number of trials are providing learning to inform design and implementation plans. These include:
· running a series of live innovation trials to test out aspects of the claimant experience which expect to deliver under Universal Credit;
· delivering and evaluating a series of Housing Demonstration Projects to trial direct payment of Housing Benefit, in preparation for the introduction of Universal Credit ; and,
· developing and evaluating a suite of Local Authority–led pilots to both help improve service delivery and collaboration and to minimse some of the delivery risks to Universal Credit.
147. Central to the effective transition to Universal Credit is the Pathfinder activity that will run in Greater Manchester and Cheshire from April 2013. This will test the new benefit payment system with Local Authorities, employers and claimants in a live environment before Universal Credit is rolled out across the country. The Pathfinder will be used to test the end-to-end service and feedback received from claimants will be used to make final improvements before the national launch. From day one, the impact of key aspects of service delivery will be reviewed: new IT functionality, operational processes, partnership arrangements, and customer journeys through the different services (online, face to face and telephony). This will ensure that a robust and reliable new service is in place for people to make a claim when Universal Credit goes live nationally.
148. To support a smooth national roll-out, a strategy has been developed for the systematic migration of benefit claimants over to Universal Credit. The migration schedule will be periodically reviewed as Universal Credit rolls out to reflect any emerging changes to national and local circumstances before migration is concluded.
149. The Department is firmly committed to evaluating and monitoring the impact and effects of Universal Credit. Universal Credit marks a fundamental change to the way in which people engage with the benefit system and access in-work financial support. Its design, implementation and delivery will span a number of years. Evaluation plans will reflect both the long timescale and complexity of the reform. That means developing a wide-ranging evaluation strategy which employs a number of different approaches over the lifetime of the policy: from ongoing monitoring, ‘live running reviews’ of implementation and delivery through to longer term analysis of the outcomes and impacts for different groups of claimants.
150. Hard evidence on the delivery and impact of Universal Credit will be key to making the most of the opportunity to reform the welfare system. A headline evaluation strategy for Universal Credit will be published in November.
17 August 2012