Universal credit: a new era?

Universal credit needs fixing. That’s certainly not the first time we’ve said that, but today the new Secretary of State for Work and Pensions Amber Rudd MP seemed to agree. At a Jobcentre in south London we got our first glimpse of what changes she has planned to make the benefit work better for everyone. Meanwhile, a couple of miles away the High Court announced that we had won our universal credit assessment period case. What do these two things mean for people claiming universal credit?

Amber Rudd’s speech set a new tone – she wants our social security system to be compassionate – and she announced some welcome changes:

First, the two-child limit will not apply to children born before April 2017, as was due to happen from next month. This is good news, but is only the first step – the policy needs to be completely abolished. It has hit tens of thousands of families and will eventually affect around 3 million children, as more and more families with young children are caught up in it. These children lose out on support when their family faces hard times simply because of the number of siblings they have. It will put 200,000 children into poverty and increase hardship for many who are already living below the poverty line.

Second, the Secretary of State is looking at how to ensure more frequent universal credit payments are available to some people who need them. We know that many people prefer to have their income spread throughout the month, and many people on universal credit will be paid by their employer more than once a month. These flexible universal credit payments should be available to anyone who wants them. On the same theme of flexibility, Amber Rudd announced that private landlords will be able to request rent payments come directly to them.

Third, it will be easier for families to manage their childcare costs. We are awaiting details, but the Secretary of State has said that not being able to pay childcare costs upfront should not be a barrier to work, and that support should be available for families in that situation through the Flexible Support Fund. More upfront help with the costs of childcare is urgently needed to allow people to start jobs without going into debt from childcare fees and this should be available as a matter of course. There will also be more flexibility about when people submit details of their childcare costs. Anything that reduces the complexity parents face in reclaiming childcare costs will be good news because far too many people are now ending up out of pocket if they accidentally submit their childcare costs at the wrong time and some have even been forced to leave their jobs. We recently highlighted examples of this in our submission to the Work and Pensions Select Committee inquiry on childcare costs in universal credit.

Fourth, the Secretary of State has said that she wants to encourage universal credit payments to be made to the main carer in a family. This chimes with our view that financial support for children should always be paid to the main carer, as it is with child benefit. That’s good for children and, vitally, helps to ensure financial independence for women. We hope that the Secretary of State will look at ensuring that money for children is automatically paid to the main carer by default.

Finally, Amber Rudd said she’d be approaching managed migration (the way people move from the existing social security system to universal credit) carefully, as there are huge risks in transferring millions of people on to universal credit. The Secretary of State made the point in her speech that “the onus should be on us [the Department for Work and Pensions] to deliver managed migration in a way that meets everyone’s needs”. This is what we have been calling for, and in order to truly ensure this is the case the managed migration pilot needs to include moving people automatically, rather than requiring everyone to make a new claim. This is vital to avoid people in vulnerable circumstances being left with no money because they either don’t realise they have to claim or find the system difficult to manage. We are yet to see whether the department will consider any such changes to its managed migration approach. Of course all this doesn’t help those moving onto the system now who will still come on to a system with many problems and no protection if they get worse off. We stand by our view that no one should be moving to universal credit in its current state.

Our High Court case highlights one of the ways universal credit needs fixing which the Secretary of State did not address in her speech. The High Court found that the way the Department for Work and Pensions has been assessing income from employment through its work assessment periods is unlawful. Four working lone parents, represented in this case by us and Leigh Day, have lost several hundreds of pounds each year and were subject to large variations in their universal credit awards because of the dates on which their paydays and universal credit 'assessment periods' happened to fall. It’s a great victory for these four women, and will have a huge impact on many others affected by this arbitrary system.

In her speech today, the Secretary of State made some welcome announcements. More encouraging still is that Amber Rudd acknowledges there is more to be done. But a test of this new-sounding Department for Work and Pensions will be whether or not the Secretary of State chooses to appeal today’s High Court ruling. If she really is listening, she won’t.