The Government has said repeatedly that once the roll-out of Universal Credit (UC) is complete, it will be more generous than the system it replaces. But it is not more generous for everyone. While some people are entitled to more money under UC than they would have received in the previous benefits system, many will be entitled to less.
Some of the Department’s plans for moving people to UC recognise that some claimants will be worse off. For instance, the Department for Work and Pensions (DWP/the Department) plans to take a cautious approach to what it calls “managed migration”—the process of moving claimants on existing benefits to UC. It plans to provide claimants who move to UC in this way with transitional protection—payments to ensure they do not lose income overnight—and other support to minimise any stress or adverse effects of the move. This is, of course, welcome.
But the majority of claimants on existing benefits will move, or have already moved, to UC through a process known as “natural migration”, which usually happens when their circumstances change. For these claimants, there is no transitional protection. People naturally migrate to UC when they have a change in their lives which would require a new claim for a legacy benefit. There are a vast number of changes which can lead to natural migration. By contrast, there are very few which can end transitional protection under managed migration. This is because the Department deliberately selected the few circumstances in which to end transitional protection, whereas the natural migration process, by its own admission, was based on its own administrative needs. The Department has moved staff away from legacy benefits to Universal Credit and other roles, and says that the only way it can administer a change of circumstances is through the claimant making a new claim to Universal Credit.
The Department argues that it is fair that claimants who experience a “significant” change in their circumstances should not receive transitional protection, on the grounds that it has always been the case that new claims for legacy benefits would be assessed on a claimant’s new circumstances. It is difficult to reconcile this explanation, however, with the fact that the design of UC—which, unlike the legacy system, now represents all, or the majority, of a claimant’s income—means that any change in a claimant’s circumstances exposes them to all aspects of UC, which may be less generous than the legacy system and which may not be related to their specific change. For example, a disabled claimant who moves home could lose their disability premiums, even though their disability remains the same. What is more, the disparity between the changes that can lead to natural migration and those that can end transitional protection mean that some claimants will lose out simply because of when their circumstances change. Therefore, when managed migration begins, households with the same circumstances will be receiving different amounts of Universal Credit—not because their needs are different, but because of the route by which they moved to Universal Credit. This cannot be fair.
For claimants, some of the changes that can trigger this move will not seem significant. For example, moving house within the same local authority area does not trigger migration to Universal Credit—but moving to a different local authority does. That means in practice that someone who moves to a different local authority area loses their entitlement to transitional protection. The DWP justifies this purely by reference to its own administrative processes, with no mention of a claimant’s needs. The Government should commit to providing ongoing payments to meet the shortfall in income for all claimants who move or have moved to UC simply because they moved home outside of their local authority.
The Department has, belatedly, taken steps to protect some disabled claimants from losing out when they move to UC by putting in place the “SDP gateway”, which is actually a barrier, and aims to prevent claimants in receipt of the Severe Disability Premium (SDP) from naturally migrating. It has also promised to compensate claimants previously in receipt of the SDP who moved to UC before the gateway existed. However, around 10,000 claimants are being made to wait for the vital support which enables them to live their lives independently. This is because the legal changes needed to make these payments are included in a statutory instrument which also provides for a pilot of managed migration to UC, which needs to be approved by Parliament before it comes into force. The Department has argued that the provisions for the compensation cannot be separated from the managed migration regulations, but it has provided no evidence as to why this is the case. The High Court has now ruled that the compensation the Government plans to pay claimants is not enough. Managed migration was due to start in July this year, but with Parliament’s recess fast approaching, and no indication of the Government’s plans to put the managed migration regulations before Parliament, the Department must take urgent action. We recommend that the Government separates the provisions for backpayments to claimants previously entitled to the SDP from the provisions for the pilot of managed migration. The Department should ensure that the provisions for claimants previously entitled to the SDP take into account the High Court’s recent ruling and it should lay the regulations as soon as possible.
Despite the introduction of the SDP gateway, cuts to disability entitlements mean that some disabled adults and children are among the groups most likely to see their income fall when they move to UC via natural migration. Many disabled people and those with long-term health conditions in receipt of disability premiums other than the SDP stand to lose out, as do some disabled children. Disabled people are often more vulnerable financially and face a greater risk of hardship than non-disabled claimants. The Government should provide payments to meet the shortfall in income for all disabled claimants who move to UC through natural migration.
A particularly cruel consequence of the Department’s approach to natural migration is the effect it has on the bereaved. Losing a partner is classed as a change in circumstance—which means that claimants who have just lost their partner must immediately claim UC at a time of considerable grief and distress. We urge the Department instead to allow people who have lost their partner to remain on legacy benefits for a grace period of one year. In addition, protections for housing costs for the bereaved have been reduced from 12 months in the legacy system to 3 months under UC—and claimants who move to UC via natural migration as a result of a bereavement will not receive this protection at all. It is unacceptable that recently bereaved claimants, who may no longer be exempt from housing restrictions such as the ‘bedroom tax’ after the death of their partner, could therefore be expected immediately to change their living arrangements at the peak of their grief to avoid plunging themselves into debt. We therefore recommend that, when bereaved claimants move to UC, the Department should provide them with payments to meet any shortfall in their housing costs for 12 months—in line with the legacy system.
The Department has made some effort to mitigate the impact of the initial five-week wait for a Universal Credit payment. Additional payments of two weeks of Housing Benefit, known as a “run-on”, are already available to claimants who migrate naturally. The Department has also announced run-ons of income-related Jobseeker’s Allowance, Employment Support Allowance and Income Support—but these will not be available until 2020. The Department’s explanation for the delay is that it cannot make the necessary changes to its IT systems until then. This is not good enough. We urge the Department to look again at the options to remove the five-week wait. Until then it must find a way to make the run-ons available by Autumn 2019.
The Department has repeatedly pledged that claimants whose circumstances remain unchanged will not lose out financially when they move to UC via managed migration. It has introduced the Severe Disability Premium Gateway in order to prevent claimants in receipt of the premium from moving to UC via natural migration. But there are no safeguards in place to stop other claimants from moving across prematurely, and potentially losing out by doing so. In addition, understanding whether someone needs to move to UC and the impact it will have on their income is far from straightforward—but the Department has not provided clear or comprehensive information on this to its staff or others. Claimants whose circumstances have not changed are therefore at risk of moving to UC either inadvertently, not realising that they will lose out, or because they are given the wrong advice by DWP staff or other organisations. We recommend that the Department does more to inform claimants that they risk losing out financially when they move to UC. This information should also be added to the UC claim homepage, and claimants should be signposted to accurate independent advice. It could for example, include this in the Citizens Advice “Help to Claim” offer, which provides help to claimants with aspects of making a claim through to first payment. However, it must ensure that this is adequately funded.
It is clearly not the Department’s intention that claimants whose circumstances remain unchanged and whose entitlement is less under UC move over before they need to. However, given the lack of safeguards to prevent this from happening, the lack of information about the process and its inherent complexities, it is little surprise that some claimants are slipping through the net into the Department’s chillingly-named “lobster pot”. Once on UC, there can be no return to legacy benefits—leaving claimants trapped with substantially less income. If someone complains, and the Department finds that it has misadvised them, they receive compensation. But this is not enough: claimants should be protected whether they move to UC prematurely by their own mistake or by following incorrect advice from the Department’s own staff or other organisations. We recommend that the Department provides full compensation to all claimants who have lost out financially because they have moved to UC prematurely.
Claimants waiting for appeal decisions on their legacy benefits are being asked to gamble with their financial future. If they claim UC while waiting for an appeal decision, they cannot return to legacy benefits—which could mean considerable financial losses. But if they choose to stay on legacy benefits in the hope that their appeal is successful, they will not be entitled to the financial support they would get under UC while they wait for the outcome of their appeal. Moreover, the Department refuses to offer compensation to claimants whose appeal is successful, effectively penalising them because of its own incorrect decisions. We recommend that the Department allows claimants to stay on legacy benefits and receive the money they would be entitled to if they were looking for work, while they await the outcome of their appeal. If this is not possible, it should pay claimants who win their appeal transitional payments, which should equate to the difference between their entitlement under UC and the amount they would have received in legacy benefits had the Department not made the wrong decision in the first place.
We recognise the Department’s responsibility to ensure that all claimants are eligible for the benefits they receive. This includes ensuring they have the right to reside in the UK. However, an increasing number of EEA nationals are failing right to reside tests when they move from legacy benefits to UC. We heard evidence that incorrect decisions on a claimant’s right to reside are leaving claimants without income and at risk of rent arrears, destitution or losing their homes. Where claimants have transferred from legacy benefits, the Department has, in most cases, already made a past decision that they have the right to reside. We were surprised to hear that the evidence required may not be available simply because the Department is not keeping claimants’ records for long enough. We recommend that the Department review whether all changes in circumstances should trigger EEA nationals to re-take a right to reside test. Where claimants have failed a right to reside test, it should clearly explain why. We also recommend that the Department reviews the impact that its data retention policies are having on EEA nationals’ access to benefits.
Failure to correctly transfer decisions on a claimant’s capability for work can have drastic consequences for disabled claimants. Not only can they find themselves with less money to live on, but they may be subject to harsher conditionality rules, with the expectation that they seek work or face sanctions. This is particularly dangerous for this group of claimants, given that in many cases the Department has assessed that engaging with Jobcentres can put them at risk of self-harm or even suicide. While we welcome the Department’s efforts to address this issue, we cannot simply accept on trust its assurances that this is not a “systemic” issue. Given the potential impact on claimants, it cannot afford to let one case slip through the net. We recommend that the Department should explore ways to make the carry-over of WCA decisions from legacy benefits to UC a more automated process. If it cannot do this, it should report regularly to the Committee on the number of cases where this is not happening on time.
Published: 23 July 2019