Universal credit: get ready
With universal credit (UC) due to begin a significant nationwide expansion from February 2015, advisers should be ready for the main rules determining access to the UC system, and the main problems and challenges likely to arise for claimants. Simon Osborne and David Simmons explain.
The gateway opens wider – for some
Access to the UC system, with its own rules on things like claims and payments, housing costs and sanctions (see below), is initially controlled by the introduction of UC for new claims and in specified areas only, and by the UC ‘gateway conditions’. Those conditions – formerly referred to as personal or pathfinder characteristics – must be satisfied before the claimant is able to make a claim for UC. Otherwise, the claimant may still be entitled to the means-tested benefits and tax credits UC replaces (so-called ‘legacy’ benefits).
Once entitled to UC however, the claimant generally remains within the UC system and does not return to the legacy benefits, even if s/he no longer satisfies the gateway conditions – a principle sometimes referred to, somewhat unflatteringly for claimants, as the ‘lobster pot’ principle.
The UC areas and gateway conditions have already undergone some change during 2014, with the introduction of new UC areas, primarily in the north-west of England, and of new claims from couples (see Bulletin 241). A list of the jobcentres in which UC can be claimed can be found at on Gov UK, though at time of writing that did not indicate the different gateway conditions that may apply in the different areas.
There are two main recent/forthcoming developments.
- The allowance of claims from people with children in certain current UC areas (certain postcode districts in Warrington and Birkenhead) making a new claim on or after 24 November 2014. However, the gateway here still excludes new claims from people with disabled children (blind or entitled to disability living allowance or personal independence payment), children looked after by a local authority (except during respite breaks), as well as claimants who are adopters or foster parents.
- A nationwide (Great Britain) rollout of UC beginning in February 2015, so that UC is introduced everywhere for some new claimants during 2015/16. ‘Some’ claimants, because this extension is due to use a gateway which will require the claimants to be single and without children.
The gateway conditions
Clearly, the government intends that the gateway can be varied across the UC areas, so that different conditions may apply in different areas. This is likely to result in difficulty forecasting whether a particular claimant will or will not satisfy the gateway conditions. So far, it seems as if the DWP has in effect been putting new claimants in UC areas through a UC claim first in order to establish whether it is UC or legacy benefits that should be claimed.
A striking example of varying gateway conditions is the creation, from 26 November 2014, of a UC ‘digital service’ test area restricted to the SM5 2 postcode part-district of Sutton – with all other UC areas now referred to as the UC ‘live service’. In the digital service test area, in effect there is no gateway and nearly all new claimants may claim UC up to 19 December 2014. Despite the terminology, the other distinguishing features of the actual rules in the digital service are slightly amended provisions covering childcare costs, assessment periods and the calculation of unearned income.
At time of writing, the main gateway conditions (ie, in the UC ‘live service’) can be summarised as follows. The claimant must be:
- aged at least 18, and under 60 years and six months;
- in some UC areas only (introduced from February 2015), single;
- a British citizen who has resided in the UK for two years before claiming without leaving for a continuous period of four weeks or more;
- in possession of a national insurance number and bank, building society or similar account.
In couple claims, the partner must also satisfy these conditions. Further, the claimant (and if in a couple her/his partner) must not:
- be pregnant or have been pregnant in the 15 weeks before the claim;
- in most UC areas only (except, currently, Warrington and Birkenhead), have children, including being an adopter or a foster parent;
- be a carer for a disabled person, except in paid or voluntary employment;
- have limited capability for work;
- be entitled to employment and support allowance, jobseeker’s allowance, or income support (or awaiting the outcome of a claim for any of those), incapacity benefit, severe disablement allowance, disability living allowance or personal independence payment (note that housing benefit and tax credits entitlement are not barriers, although entitlement will cease if UC starts);
- have earned income of more than £330 a month or capital of more than £6,000;
- be a student ;
- be homeless or getting care, supervision, etc support services provided in her/his home by (or on behalf of) the accommodation provider.
The default method of claiming UC is online, with telephone claims only allowed with the DWP’s authority. There are no clerical claim forms. Assistance for vulnerable claimants is provided by local support services established by the DWP and local authorities, and advisers need to find out how to access these services.
Advisers assisting with online claims need the required IT and time to elicit and enter the necessary information. The majority of claims are currently fairly simple (from single jobseekers), but this will change as UC is extended to families, people with disabilities, and those in work. The IT is also being developed to allow online reporting of changes of circumstances, which is likely to lead to disputes about whether and when information was sent and received electronically. Note that claims can only be backdated for a maximum period of one month (in prescribed circumstances). This contrasts with the maximum six months backdating of housing benefit claims, which can be instrumental in reducing rent arrears and preventing possession proceedings.
Calculation of entitlement
Advisers need to familiarise themselves with the new integrated structure of UC when carrying out benefit checks and ‘better-off in work’ calculations. This involves understanding the different elements of UC and the calculation of income and earnings, including the different levels of ‘work allowances’.
Default monthly payments in arrears made directly to claimants, is likely to cause budgeting difficulties for some claimants. Those making a claim for UC will have to wait for at least five weeks until their first pay day and may need to apply for a short-term benefit advance. Claimants who have been getting UC for at least six months can apply for a budgeting advance to meet an ‘intermittent expense’. Claimants who run out of money in other circumstances may have to rely on ‘local welfare assistance’. Claimants who need budgeting advice should be referred to the Money Advice Service by the DWP.
Advisers also need to be aware of the ‘alternative payment arrangements’ which can be put in place by the DWP – ie:
- twice monthly payments;
- payment to a different partner in a couple (or ‘split payments’);
- direct payments of housing costs to landlords, which should be considered where there is one month’s rent arrears and automatically put into effect where there is at least two month’s rent arrears. Note also that from 10 to 20 per cent of a claimant’s UC standard allowance can be deducted and paid directly to a landlord to pay off rent arrears.
Advisers should find out how, and to whom, to make representations (eg, by telephone, email or in writing) to secure an alternative payment arrangement.
Changes of circumstances
The default rule whereby changes of circumstances normally take effect from the first day of the monthly ‘assessment period’ in which they occur means that considerable amounts of benefit can be gained or lost depending on when a change is notified or effected. Changes which increase entitlement need to be notified as soon as possible to secure maximum backdating. Late notifications are likely to require detailed representations about ‘special circumstances’ to secure full backdating. Postponing changes which reduce entitlement to the start of the following assessment period can sometimes result in considerable gains.
In addition to continuing to grapple with the ‘local housing allowance’ for private tenants and under-occupation deductions (the ‘bedroom tax’) for social tenants, advisers need to be aware that:
- the standard deduction for non-dependants is £68.68 a month (subject to exemptions);
- housing costs for ‘supported accommodation’ (which now includes domestic violence refuges and local authority hostels), will continue to be met by housing benefit;
- housing costs for mortgage interest is not payable to claimants with ‘any earned income’.
Conditionality and sanctions
UC builds on the increasingly tough conditionality regime being applied to current claimants by:
- making the acceptance of a ‘claimant commitment’ a condition of entitlement (and both partners in a couple have to agree to their commitments before any UC can be paid);
- introducing ‘in-work conditionality’ for those earning below an earnings threshold (there are likely to be randomised trials of this in 2015);
- making ‘hardship payments’ payable only where claimants cannot meet their immediate and essential needs, and repayable by ongoing deductions from benefit.
The benefit cap
UC is included in the ‘benefit cap’, which will operate by making deductions from UC (after offsetting any child costs element), rather than from housing benefit, as is currently the case.
Please be aware that welfare rights law and guidance change frequently. Therefore older Bulletin articles may be out of date. Use keywords or the search function to find more recent material on this topic.