Eighth Report Contents

Instruments drawn to the special attention of the House

Draft Universal Credit (Managed Migration) Regulations 2018

Date laid: 5 November 2018

Parliamentary procedure: affirmative

These Regulations, laid by the Department for Work and Pensions (DWP), provide for the transfer into Universal Credit of the nearly 3 million people who are currently receiving benefits under the “legacy” system of different benefits and tax credits, each of whom will be required to reapply for their benefit. Although the Explanatory Memorandum provides information on the individual regulations, it fails to set out the broader context and timetable in which they will operate. This Report provides additional information and raises questions put by a number of expert organisations: Child Poverty Action Group, Mind, SCOPE and the Trussell Trust. Our correspondence with the Secretary of State is published at Appendix 1.

Although we believe DWP’s motives for taking the flexible approach outlined are well-intentioned, there is a wide degree of concern that current plans for the migration process are rather too vague and aspirational. It seems therefore that DWP may have acted prematurely in seeking such extensive powers and we suggest that it would be better for DWP just to seek legislative cover for the pilot, which it, in any event, describes as a distinct phase. Information from that exercise could then be used to reassure the House of DWP’s operational capacity and the welfare of the transferred claimants, before further powers to migrate the main group are granted. We take the view that the House has been given insufficient detail to make an informed decision on DWP’s proposals. The House may wish in particular to press the Minister further for justification of the Secretary of State’s assertion that the various elements are “inextricably linked”.

The House may also wish to press the Minister on whether DWP may be attempting too many changes at once by wishing to combine a changeover from fortnightly to monthly payments for some, with a complete reassessment of all claimants’ needs and a data cleansing operation. A National Audit Office report has already raised concerns about the DWP’s ability to run the programme as it currently stands. The large number of unknowns, and the particular difficulty and risks involved in transferring three quarters of a million very vulnerable claimants to Universal Credit, cause concern about the welfare of this group, particularly if, as it currently appears, they are expected to survive the changeover period on less money than they need. DWP’s reliance on repayable advances to bridge any gap does not take account of the long-term hardship subsequent deductions can cause. DWP is initiating these changes but it is the claimant that bears all the risk if their income is interrupted. Transitional arrangements should ensure not just that migrated claimants are paid the correct amount for each benefit week but also that the pattern of payments during the changeover period does not force them into hardship or debt.

These Regulations are drawn to the special attention of the House on the ground that they may imperfectly achieve their policy objective.

8.These Regulations have been laid by the Department for Work and Pensions (DWP) with an Explanatory Memorandum (EM) and a report from the Social Security Advisory Committee (SSAC).4 They enable the Department to move those who are currently receiving benefits under the old “legacy” system of different benefits5 and tax credits into the new system of Universal Credit, a process described as “managed migration”.6

9.Although the EM provides information on the effect of individual regulations, it does not set out the broader context, how many people will be affected or any timetable. Additional information was therefore requested from the Secretary of State for Work and Pensions, the Rt Hon. Amber Rudd MP, and her letter of 26 November 2018 is published as an Appendix to this Report (Appendix 1).

10.We have also received submissions from four expert organisations (“the submissions”): the Child Poverty Action Group, Mind, SCOPE and the Trussell Trust. Their submissions are published in full on the Committee’s publications webpage.7 DWP’s responses to issues raised in their submissions are set out in this Report and in Appendix 2.

11.No formal Impact Assessment has been provided. Given the numbers of people affected by the Regulations and the costs, we find this disappointing.

The scope and broad plan

12.DWP is approaching the mid-way point in the roll-out of Universal Credit. Since May 2016, Universal Credit “full service” has been rolled out by postcode and by December 2018 will be in every job centre nationwide. From the beginning of 2019, all new benefit claims made should be for Universal Credit. DWP estimates that there were 1.2 million people on Universal Credit in September 2018 due to “natural migration” and that this figure will rise to 2 million by April 2019 at a growth rate of 150,000 a month.

13.DWP estimates that around 2.09 million households involving 2.87 million individuals will be subject to “managed migration”, each of whom will be required to reapply for their benefit. Table 1 shows the broad categories:

Table 1: Breakdown of claimants being managed migrated to Universal Credit by existing benefit group

Existing Benefit

Number

Percentage

Job Seekers Allowance

(JSA only / JSA & CTC and/or HB)

39,000

2%

Employment and Support Allowance

(ESA only/JSA & CTC and/or HB)

745,000

36%

Income Support
(IS only / JSA & CTC and/or HB)

119,000

6%

Child Tax Credit

(CTC only / CTC & HB)

395,000

19%

Working Tax Credit + Child Tax Credit (WTC & CTC only / WTC & CTC &HB)

620,000

30%

Working Tax Credit (WTC only/WTC+HB)

102,000

5%

Housing Benefit (HB only)

72,000

3%

Total

2,092,000

101% (rounded)

Source: Social Security Advisory Committee (SSAC), The Draft Universal Credit (Managed Migration) Regulations 2018

14.Of particular concern, illustrated by examples in the submissions, are the 745,000 Employment and Support Allowance (ESA) claimants, many of whom are especially vulnerable people on long-term benefits who would not otherwise need to make a new claim and may struggle to do so.

15.The Regulations include a safeguard, called Transitional Protection, which may be paid to existing benefit claimants who would otherwise receive less money on migration to Universal Credit than under their existing benefits. DWP estimates that around 900,000 households will be paid Transitional Protection and that it will cost over £3 billion over a period of five years.8

16.The Regulations also provide, in most cases, for a two-week “run-on” payment of existing benefits intended to cover the gap between the legacy benefits ending and the first payment of Universal Credit.

Support to claim

17.The submissions we received highlight a number of groups who need significant support in making a benefits claim. These include those with disabilities, full-time carers, those who are illiterate or do not have good English, and those without access to a computer. Home visiting and telephone support from DWP officials is described in the submissions as “patchy and can involve long waiting times”, resulting in increased demand for assistance from organisations such as Citizens Advice. We therefore asked what additional resource DWP intends to invest to support claimants.

18.DWP replied:

“Currently 99% of claims are made online and support is already provided through Universal Support to help people make and manage their claims … On 1 October [2018], the Department announced a new partnership with Citizens Advice to provide Universal Support from April 2019 for those moving to Universal Credit. The support scheme will help claimants through every step of making a Universal Credit claim. It will offer people comprehensive and practical support. In addition, we have also been engaging with a large number of stakeholders on the managed migration process and additional support that would need to be offered to claimants during this process.”

19.In her letter, the Secretary of State added: “This pilot is not to test the operational readiness of Universal Credit. The regulations represent fixed Government policy on managed migration. The testing phase, however, will test the processes that support managed migration and what can be adjusted to ensure that claimants are given the right support to be able to claim Universal Credit successfully.”9

Impact on local authorities and charities

20.In her letter, the Secretary of State asserted: “The Regulations do not impose any additional regulatory burdens, costs and obligations on business, social enterprises, individuals and community groups in the sense of the Better Regulation Framework.”10 We found this surprising.

21.Although the Regulations do not impose direct obligations on local authorities and charities, the submissions and the SSAC Report indicate the significant support those making new claims for Universal Credit need from local authorities and charities, and also concerns about future demand for their services.11

22.A National Audit Office (NAO) report (“the NAO Report”), published in June 2018, stated that local organisations which support claimants had reported additional costs and that, since DWP has not systematically collected data on the wider costs, the Department would have no means to assess the full monetary impact of Universal Credit.12 The House may wish to press the Minister for more thorough information about the wider effects of implementing Universal Credit.

Dates and piloting

23.The Regulations have several commencement dates:

24.DWP has separately announced that “managed migration” testing will begin in July 2019, that they will take on larger volumes from 2020 onwards, and complete the process in 2023: “We will begin with small-scale testing to ensure that the process works well, before the volume of migration increases. No more than 10,000 people will be migrated in 2019”.13

25.DWP states that the Regulations provide the framework for the managed migration process, but that there is flexibility on how this is to be delivered. A key feature of the piloting phase will be working with stakeholders. The EM sets out the four initial work streams that DWP will be focusing on:14

“(1) how we create a successful claimant experience, exploring how we understand our claimants and their needs;

(2) how we deliver that experience, including what role delivery partners and external organisations might play in migration;

(3) how we communicate and engage with claimants, engaging effectively with different types of claimants; and

(4) how we identify and support our most vulnerable claimants.”

26.We welcome DWP’s stated intention to continue discussions with stakeholders and to pilot the arrangements before migrating the bulk of the existing claimants. It is not clear to us, however, whether DWP should be seeking provision to enable implementation of the whole of the “managed migration” programme when so many practicalities appear to be unresolved. The House may wish to invite the Minister to provide further justification.

Capacity

27.Not only is the “managed migration” a significant undertaking in its own right, but it will happen alongside natural migration and the routine running of Universal Credit for millions of existing claimants. We note that the Regulations include a contingency provision to defer the start date of Universal Credit for up to a month from the day the claim is made so that DWP can manage its own staff resources.15 In supplementary material to the Committee, DWP has stated that this will be used sparingly.

28.The NAO Report, published in June, had already raised questions about DWP’s capacity to manage the roll-out of Universal Credit. This was before the addition of the “managed migration” programme. The NAO Report said: “The Department must now ensure that the programme does not expand before business-as-usual operations can deal with higher claimant volumes, and must learn from the experiences of claimants and third parties”. The House may wish to press the Minister for reassurance about DWP’s capacity to undertake this major extension of the programme.

Issues raised by submissions

The “hard stop”

29.The submissions express concern about “the hard stop”, that is the potential for existing benefit payments to be stopped if a new claim for Universal Credit is not made by the allotted deadline. Regulation 44 makes provision for the issue of a Migration Notice that requires a claimant on legacy benefits or tax credits to make a new Universal Credit claim by a specified day. Regulation 46 states that if this is not done within three months all benefits will terminate automatically.

30.We asked DWP why the Department had not chosen to use current provision that enabled it to convert existing claims for legacy benefits automatically into Universal Credit, rather than putting claimants at risk of receiving no money at all. The Secretary of State responded:

“There are a number of reasons why we are not automatically transferring claims:

Nevertheless, we have said that we will use existing decisions or verification to make aspects of the process easier. For example, if a claimant has an existing Work Capability Assessment decision, they will not be required to have another assessment in order to get the disability additions of Universal Credit. Where a Tax Credit claimant has already verified their identity, in order to make and maintain their Tax Credit claim, we may be able to reuse this digital registration to the benefit of the claimant. Also, for claimants who do not have any work-related requirements, we already operate a digital claimant commitment acceptance process and we will carry that forward as part of the managed migration process. This will mean a significant number of claimants will not need to attend a face-to-face interview.”16

31.The submissions welcome the modifications that DWP has made following consultation, including taking a discretionary power to grant an extension to prevent a claimant’s benefits being stopped “where there is good reason to do so” (Regulation 45). They question, however, how that power will work in practice. There is concern that DWP staff may be unable to identify someone with an “invisible problem”, such as a mental health condition, who is struggling to engage with the process, and that vulnerable people will lose their benefits as a result.

32.In her letter, the Secretary of State explains the Department’s intention to include a four to six month warm-up period to advise claimants on preparations that they should make prior to the notification period.17 The testing period will also include extensive stakeholder engagement on how they will support claimants within the three month window to claim Universal Credit.

33.The groups that have written to us are experienced in this field and their submissions warn that there will be a significant number of those with health problems or disabilities who will only notice when the money has stopped. The House may wish to seek assurance from the Minister that there will be adequate emergency help and additional resource available to assist this particularly vulnerable group through the migration process.

Run-on support

34.The Committee asked why, if the pilot process starts in July 2019, the two-week run-on payment does not come into effect until July 2020. DWP explains that it is because the process will need to be automated, as manual administrative processes could not cope with the volume of claims. In her letter, the Secretary of State states: “our confidence in our ability to deliver the run-on is indicated in the fact that we have given a definite coming into force date in the regulations”.18 Given the DWP’s past record with IT programmes this confidence may not be well-founded. The House may wish to ask the Minister whether DWP is seeking to commence “managed migration” before the necessary computer software is available to support it.

35.Instead of a run-on payment, for the 10,000 claimants in the testing phase there is a provision for a non-recoverable Discretionary Hardship payment to be made available to all those “who appear to be in hardship” as a consequence of “managed migration”.19 Because the hardship payment is discretionary, it appears to us that there is a risk that some individuals in need will be missed. It is not clear why claimants in the testing phase cannot be routinely given a transitional payment in the same way as claimants migrating in the later phases, and the House may wish to press the Minister for a fuller explanation.

Transitional arrangements

36.DWP is required to calculate an indicative Universal Credit award for all people going through “managed migration” so the level of Transitional Protection can be assessed (Regulation 54). This is to cushion those who would otherwise receive less benefit following their transfer to Universal Credit. The Child Poverty Action Group asked why the amount of Transitional Protection could not be paid as an interim payment while DWP collects further information to update the claim and check the accuracy of data. DWP responded:20

“Universal Credit is paid monthly in arrears, and so this would not resolve the need for claimants to adjust to a different payment frequency. For example, if someone claimed Universal Credit on 14th July 2019, so the first payment date would be [20th] August 2019.21 If that claimant was paid the first payment on the 21st July, then the second payment would not be until 21st September. This would mean that the claimant would have a two-month gap between payments. By far the best option for claimants to adjust to the different payment frequency is the two-week Transitional Housing payment, which has already been introduced for natural migration and will likewise be available for managed migration claimants, and the two-week income-related benefit run on, which will be available from July 2020. Claimants are still able to access up to 100% advances, which are currently repayable over 12 months. In addition, while claimants are awaiting their first payments, they are also likely to receive final payments from legacy benefits during this period; this is very much governed by individual circumstances.” [emphasis added]

37.It appears that DWP’s objective is to fit all claimants into its standard Universal Credit payment schedule from the start. In her letter, the Secretary of State emphasises that “one of the key principles of Universal Credit is that it should prepare claimants for work, which is why the benefit is paid monthly”.22 She added: “for people who are struggling to adjust to monthly payments, Alternative Payment arrangements are available on Universal Credit”. This again suggests that the claimant has to struggle before relief is available to them. Because a significant proportion of the 745,000 ESA claimants being transferred in this group have limited or no capability for work, and in consequence are entirely dependent on benefits, the House may feel that some greater flexibility should be applied to them in the changeover period.

The Gap

38.The example provided by the DWP and set out in paragraph 36 above indicates that someone making a new claim for Universal Credit will receive their first payment over five weeks later. Residual money from legacy benefit will be paid up to the date of the new claim, but even with the two-week benefit run-on payment, it appears that many in the fortnightly-paid ESA group would have to live for the over five week changeover period on a maximum of just four weeks’ money. If they claim Universal Credit mid-ESA-cycle they will have less than two weeks’ legacy benefit money to add to their run-on. The House may wish to ask the Minister what steps will be taken to ensure that this group have sufficient money to cover the changeover period.

39.The example also assumes that DWP will finish processing every new Universal Credit claim within the four week assessment period. The NAO Report states, however, that in March 2018 21% of new claimants did not receive their full entitlement on time, with 13% receiving no payment. The NAO estimates that in 2018 between 270,000 and 338,000 new claimants will not be paid in full at the end of their first assessment period.

40.In her letter, the Secretary of State says: “The Department’s solution for the period until first award is received is to allow all claimants to receive an advance of up to 100% of their total Universal Credit entitlement. It should be made clear that the advance means that claimants receive the same amount of money over the first twelve months in thirteen payments, rather than twelve”.23

41.Again, it appears to us that DWP is failing to consider the impact of this policy from the claimant’s perspective. Although he or she will ultimately receive all the benefit due to them, the timing of those payments in the changeover period is as crucial for their welfare as the amount. A repayable advance can cause long-term difficulties, because, due to the deductions to offset that sum, claimants will have to live on less than the sum which the DWP has assessed that their household needs to get by. The NAO states that in 2017 average new claim advance repayments were around £43 per month or around 8% of the average monthly payment.

42.Delays in payment also increase the risk that a claimant might fall into arrears with rent in this period causing “knock-on” administrative and cash-flow problems for local authorities and private landlords.

43.DWP has initiated “managed migration”. The system should, therefore, ensure that a claimant is not forced into debt because they have been given insufficient funds to match their calculated needs for the transfer period. The House may wish to press the Minister for assurance on this point.

Success criteria

44.The Trussell Trust, and the other submissions, asked for better information on what DWP aims to achieve and by when. In response to the SSAC Report, the DWP said that success criteria will be in place in 2020 for the large-scale “managed migration” but that none have been defined for the initial “test and learn” phase. We also asked whether DWP’s evaluation of the system’s readiness to scale up for the main phase of “managed migration” will be published for external scrutiny.

45.In her letter, the Secretary of State said:

“The testing phase will help us determine how best we should increase the numbers of claimants we will take through the managed migration process. We have committed to publishing a report following the testing phase, along with the criteria we will use to judge whether the Programme plans are mature enough to support large numbers moving through managed migration. We will also present our assessment of our operational readiness to the Independent Infrastructure Projects Authority to evaluate and will publish both reports in 2020 before we move to increase numbers in line with the new timetable.”24

46.That there will be a degree of external oversight is welcome, but once these Regulations are agreed there will be no scope for Parliament to influence the programme. Although we believe DWP’s motives for taking this flexible approach are well-intentioned, there is a wide degree of concern that current plans for the migration process are vague and aspirational. The House may wish to ask the Minister about how success at the initial stage will be defined.

Conclusion

47.DWP has claimed that these Regulations need to be passed urgently to enable claimants in receipt of Severe Disability Payments (SDP) to be removed from natural migration so that they will benefit from Transitional Protection.25 In our letter to the Secretary of State, we asked why that provision could not be made by separate regulations. The Secretary of State told us that the provisions of the gateway for SDP claimants and the development of the “managed migration” programme “are inextricably linked”. The House may wish to press the Minster for further justification of that assertion.26 The SSAC believes that a segmented approach, recognising the distinct needs of different groups, might provide for a better claimant experience. The pilot phase is in any case described as a distinct stage in the Department’s plans. Splitting the regulations should not require any significant delay to the DWP’s programme; it would simply create a pause in 2020 to allow the results of the pilot to be evaluated before Parliament gives its agreement for the remainder to be migrated.

48.The House may wish to press the Minister on whether DWP may be attempting to make too many changes at once by wishing to combine a changeover from fortnightly to monthly payments for some, with a complete reassessment of all claimants’ needs and a data cleansing operation. The NAO report has already raised concerns about the DWP’s ability to run the programme as it currently stands. We take the view that the House has been given insufficient detail to make an informed decision about DWP’s proposals. Given the large number of unknowns, and the particular difficulty and risks involved in transferring three quarters of a million very vulnerable claimants to Universal Credit, it seems that DWP may have acted prematurely in seeking such extensive powers. We welcome the Department’s intention to consult representative groups in formulating their arrangements, but consider that those plans should be far more developed before Regulations permitting the full conversion to Universal Credit are put before the House.


4 Social Security Advisory Committee (SSAC), The Draft Universal Credit (Managed Migration) Regulations 2018 (5 November 2018): https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/753731/print-ready-draft-universal-credit-managed-migration-regulations-2018-report.pdf [accessed 5 December 2018]. The SSAC Report makes a number of recommendations that are referred to in the EM at paras 10.9 to 10.48.

5 Income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Income Support and Housing Benefit.

6 In contrast, “natural migration” concerns people who make a new claim for universal credit due to a change in circumstances (such as losing a job).

7 SLSC Sub-Committee B publications page: https://www.parliament.uk/business/committees/committees-a-z/lords-select/secondary-legislation-scrutiny-committee-sub-committee-b/publications/ [accessed 5 December 2018]. .

8 Secretary of State’s response to question 9 in her letter of 26 November 2018 which provides a breakdown of the anticipated spending over the next five years (see Appendix 1).

9 Response to question 2.

10 Response to question 10.

11 See also para 10.8 of the EM.

12 National Audit Office, Rolling out Universal Credit (HC 1123) (15 June 2018): https://www.nao.org.uk/wp-content/uploads/2018/06/Rolling-out-Universal-Credit-Summary.pdf [accessed 5 December].

13 Social Security Advisory Committee, The Draft Universal Credit (Managed Migration) Regulations 2018, p 113.

14 Para 10.56 of the EM.

15 Para 7.12 of the EM.

16 Response to question 4.

17 Response to question 8.

18 Response to question 11.

19 Regulation 65, see also responses to questions 8 and 12.

20 See also responses to questions 5 and 6.

21 DWP made the following amendment: “With respect to the original example provided to the Committee we quoted 21st August as the first payment date. The first assessment period would run from 14th July to 13th August with the first payment due 20th August. This has now been corrected in the letter”.

22 Response to question 6.

23 Response to question 7.

24 Response to question 3.

25 See Appendix 2.

26 Response to question 1.




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