For five years, Universal Credit has dutifully fulfilled its role as political football, revered and abhorred in equal measures by different sides of the political divide. To some, it is a cruel and callous policy designed purely to take money from the wallets of the most deprived. Others extol the virtues of simplifying the welfare system and supporting people who were previously trapped in the legacy benefits system, into work. But behind the politics lies a misunderstood system, altered significantly by policy changes since it was first introduced in 2013.
From December, the full Universal Credit service will be available at every Job Centre Plus in Wales. Universal Credit now lies at a crossroads, with 2019 bringing plans to start the process of transferring existing legacy benefit claimants onto the new system.
The principle of Universal Credit is clear: the combination of six legacy benefits into one monthly payment, in order to give claimants more control over their finances and promote employment. A key tenet of this was to ensure that the payment of Universal Credit mirrored the world of work through a single monthly payment. Which would make sense, if it weren’t for the quarter of workers who are paid more frequently than monthly. For low paid employees, this proportion is even larger, making monthly payments even less relatable to people who require support through Universal Credit.
The transition to receiving benefits monthly, combined with a five week wait for the first payment, is leading to increasing rent arrears among new claimants. The average housing association tenant claiming Universal Credit now has double the arrears compared to tenants receiving Housing Benefit.
Significant changes have been made to Universal Credit since its inception, including shortening the waiting time to five weeks, continuing existing Housing Benefit claims for two weeks into a new Universal Credit claim and allowing working claimants to keep more of their money. The 2018 UK Budget continued this process with announcements of increased support for claimants transferring from the legacy benefits system. The National Audit Office have warned that, given the number of concessions made by UK Government, Universal Credit may eventually cost more to run than the legacy system it is replacing. Taking this into account, further significant changes to Universal Credit will be much harder won, as each change in policy adds to the overall cost of delivering the benefit. Housing associations’ concern has now shifted to planning their support for those existing legacy benefit claimants who will be transferred onto Universal Credit during the next phase of roll out, referred to as ‘managed migration’.
Starting in July 2019 with a small scale pilot, the managed migration process is due to be completed by the end of 2023. During this period, all eligible claimants of the six legacy benefits will be contacted informing them that they will need to claim Universal Credit. Their legacy benefits will then be terminated on a set date, regardless of whether they have successfully claimed Universal Credit. The scale of planned managed migration is set to place significant pressures on both vulnerable claimants and the support services they will rely on.
Around 400,000 households will be in receipt of Universal Credit once the managed migration process completes in Wales. Once this point is reached, currently scheduled for December 2023, nearly one in three households will be claiming Universal Credit in place of Child Tax Credits, Housing Benefit, Job Seeker’s Allowance or another of the six legacy benefits. Taking into account the initial slower test period of managed migration, and that only around 45,000 households currently claim Universal Credit in Wales, current plans will require 350,000 households to claim over a three year period. This will place significant pressure on the remaining Job Centres Plus, housing association support services and their colleagues in the wider advice sector.
Housing associations stand ready to support their tenants through the process of managed migration, working alongside third sector advice services, including the newly restructured UK Government Universal Support service delivered by Citizens Advice. Support for financial and digital literacy, budgeting and debt has long been provided by social landlords to their tenants, but managed migration will bring a step change in the number of people requiring advice and support, with little additional resourcing from UK Government to housing associations to provide this advice.
In this resource constrained environment, support services need to be targeted and efficient. Landlords need to know when their tenants are due to lose their legacy benefits, so they can provide support to the right people at the right time. To enable this, CHC are calling on UK Government to amend regulations currently passing through Parliament in order to allow the DWP to inform social landlords when their tenants will be migrated. This small change could prevent thousands of vulnerable people falling through the cracks between the legacy system and Universal Credit.
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