Eighth Report Contents

Appendix 1: Correspondence on Draft Universal Credit (Managed Migration) Regulations 2018

Letter from the Rt Hon. Lord Cunningham of Felling, Chairman of the Secondary Legislation Scrutiny Committee (Sub-Committee B), to the Rt Hon. Amber Rudd MP, Secretary of State for Work and Pensions

We welcome the Department for Work and Pensions’ (DWP) intention to talk with interested groups in developing the arrangements for migrating existing claimants to Universal Credit, and note that those groups acknowledge that DWP has already made some concessions to address their concerns. When scrutinising these proposals, however, we have in mind that around three quarters of a million people currently on Employment and Support Allowance may have particular difficulties in the transition. 

We are considering drawing these Regulations to the special attention of the House and, before deciding to do so, would like to have further clarification on the questions set out below:

Timing:

Q1: DWP has claimed that these Regulations need to be passed urgently to enable claimants in receipt of Severe Disability Premium to be removed from natural migration by 16 January 2019 so that they will benefit from Transitional Protection. Why can that provision not be made by separate regulations and allow the House sufficient time to scrutinise the regulations for the main migration properly?

Q2: DWP has announced that managed migration will begin in July 2019 with a small-scale test involving no more than 10,000 people. Why are the current Regulations not limited to enabling that pilot? What is the rationale for seeking the House’s authority to migrate nearly 3 million people to Universal Credit before the outcome of the pilot phase has been evaluated and DWP is in a position to reassure the House of its operational readiness to complete the migration?

Q3: We are grateful for the comprehensive information in the Explanatory Memorandum(EM) about how each individual provision is intended to operate, but it offers no information on DWP’s wider plans for undertaking this phased migration. Could you provide us with a clearer indication of how and when these powers will be used?

The “Hard stop”:

Q4: Regulation 46 says if a fresh claim for Universal Credit is not made within three months all benefits will terminate automatically. These changes are being made for DWP’s administrative convenience and not because the claimants’ entitlement to benefit is in question. Why is DWP putting those claimants, who, for a variety of reasons, may struggle with the new claim, at risk of receiving no money at all?

Q5: One submission we received suggested that, as DWP is required to calculate the Transitional Element in any case, it could pay that figure to the claimant while their Universal Credit claim is reassessed and data is cleansed, rather than risking claimants’ benefits being stopped altogether because they struggle to engage with the process. Is that possible? Why has DWP not chosen to follow that route?

Changeover:

Q6: For those currently receiving Employment and Support Allowance (ESA), changing from fortnightly payments to monthly payments will require claimants to make adjustments that many will find complicated and stressful. Why can that change not be made separately within their existing benefits regime before transferring them over to Universal Credit, so they do not have to cope with too many changes at once? What is the rationale for not treating this group differently from those who are already paid monthly, say, the Tax Credits group?

Q7: We were given the following example: an existing claimant who initiated their claim for Universal Credit on 14 July would receive their first payment of Universal Credit on 21 August. Although they will eventually be paid for every day claimed, in the interim they would be paid their existing benefits up to their date of new claim, plus a two-week “run on”. For ESA claimants who are paid fortnightly, that appears to us to require the claimant to survive the five and a half week changeover period on a maximum of four weeks’ money, less if the claim for Universal Credit is made mid-cycle. Is that correct? If so, how does DWP justify putting the claimant into hardship and debt during the changeover period?

Q8: What guarantee can DWP give that the reassessment and data cleansing of each new claim to Universal Credit will be completed within the projected deadline to enable prompt payment? What emergency provisions has DWP put in place to assist claimants whose assessment takes longer than that, and who are at risk of having no income until that assessment is done?

Impact:

Q9: The EM estimates that about 900,000 households will receive Transitional Protection, and most will receive a two-week ex gratia “run-on” payment. Given the huge numbers of people and sums of money involved we are disappointed that no more recent Impact Assessment than 2012 has been provided to inform Parliament’s consideration. Please can you provide us with estimates of the anticipated cost of the transition that these Regulations would enable?

Q10: Considering the extensive engagement described in the EM to provide insight into the issues landlords and local authorities face and “to protect their financial position” we were surprised that paragraph 12.1 claims that there is no impact on business, civil society organisations or the public sector from these Regulations. Does that mean DWP is contemplating some form of compensation to redress the “new burden”? Can you please describe what measures are being taken to ease the knock-on effects of the migration on these groups?

Capacity:

Q11: The Committee did not initially understand why, if the pilot process starts in July 2019, the two-week “run on” payment does not come into effect until July 2020. We were told that is “because it has to be automated”. What reassurance can you give us that the necessary computer software will be ready in time?

Q12: Several of the powers sought in these Regulations are discretionary, for example the power under regulation 45 to prevent someone’s benefits being stopped “where there is good reason to do so”, or, in the first year, to make an additional run on payment “if the applicant appears to be in hardship”. Given that it is DWP that is initiating the disruption to the claim, why are these provisions not automatic? Why does the legislation allow for individuals to receive different treatment at different points in the transitional period?

21 November 2018

Letter from Amber Rudd MP to Lord Cunningham of Felling

Thank you for your letter of 21 November regarding the Universal Credit (Managed Migration) Regulations 2018. Please see my responses to your questions set out below.

Timing

Q1: DWP has claimed that these Regulations need to be passed urgently to enable claimants in receipt of Severe Disability Premium to be removed from natural migration by 16 January 2019 so that they will benefit from Transitional Protection. Why can that provision not be made by separate regulations and allow the House sufficient time to scrutinise the regulations for the main migration properly?

A1: We have made and now honoured, a number of commitments to make the draft regulations subject to the affirmative procedure so that both Houses will have the opportunity to scrutinise, debate and approve them before they come into force.

There has also already been a great deal of public scrutiny of our proposals and draft regulations to support managed migration. The draft regulations were sent for scrutiny to the independent Social Security Advisory Committee who submitted them for a formal public consultation. The Committee received over 450 responses to this consultation and presented their report on their findings to the Secretary of State with a number of recommendations for the regulations and the introduction of the managed migration. The former Secretary of State provided her response to that report when laying the draft regulations on 5 November 2018. This response accepted, in whole or in part, all but one of the Committee’s recommendations.

The Department also carried out a formal consultation with Local Authority Associations on the draft regulations, which ran from 22 June 2018 until 3 August 2018. This gave Local Authorities the opportunity to comment on our plans.

We have commenced a programme of engagement with relevant stakeholders and will be looking to co-design our processes with claimants, charities, experts and other stakeholders, making sure that it works for everyone.

These regulations will introduce an integrated overall package for the introduction of managed migration and support for those moving to Universal Credit. The provisions for the Universal Credit gateway for Severe Disability Premium (SDP) claimants and the transitional payment for former claimants are inextricably linked with managed migration and transitional protection. Its ongoing award and maintenance will be dependent on the framework in these draft Universal Credit (Managed Migration) Regulations 2018, which is applicable to all groups that are managed migrated.

There is a significant amount of preparation needed for managed migration, so while managed migration is not due to begin until July 2019, the Department needs legislative certainty in order to make the appropriate arrangements. This is especially important for preparation with HMRC and Local Authorities, as well as other stakeholders.

Similarly, the Department needs to have legislative certainty to allow the award of the new two-week run on for Employment and Support Allowance, Income Support and Jobseeker’s Allowance so that we can get on redesigning our IT systems ready to start paying the run on from July 2020.

Q2: DWP has announced that managed migration will begin in July 2019 with a small-scale test involving no more than 10,000 people. Why are the current Regulations not limited to enabling that pilot? What is the rationale for seeking the House’s authority to migrate nearly 3 million people to Universal Credit before the outcome of the pilot phase has been evaluated and DWP is in a position to reassure the House of its operational readiness to complete the migration?

A2: This pilot is not to test the operational readiness of Universal Credit. As explained in the information we provided to the Committee earlier this month, by December 2018, Universal Credit will be live in every jobcentre in the country and the number of people on Universal Credit rose to 1.2 million in September 2018. By April, we estimate that there will be 2 million claimants on Universal Credit, which will be growing at a rate of 150,000 a month.

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.

When the testing is complete, we will use the information gathered to clarify the criteria for successful processes, and confirm them through Universal Credit Programme governance. This will take into account a number of factors including operational readiness, efficiency of the service, key functionality being in place and ensuring we have processes in place to support vulnerable claimants. We agreed with the Social Security Advisory Committee when responding to their report on the need for setting the correct criteria and expect to set those in 2020 in line with the new timetable and before we undertake an assessment. This assessment, once complete, will be published.

Q3: We are grateful for the comprehensive information in the Explanatory Memorandum (EM) about how each individual provision is intended to operate, but it offers no information on DWP’s wider plans for undertaking this phased migration. Could you provide us with a clearer indication of how and when these powers will be used?

A3: The powers in the regulations will allow us to initiate the process for the management migration of claimants from existing benefits to Universal Credit and allow for the termination of a claimant’s existing benefit. To initiate a claimant’s managed migration the Secretary of State will inform them to tell them that they need to make a new Universal Credit claim by a specific day if they wish to continue to receive welfare support. The regulations also provide that all claimants must be given a minimum of three months in which to make their claim to Universal Credit. But they do allow a longer time period to be given if considered appropriate and also for an extension to the period given if required. The claimant’s existing benefits will be terminated from the day before they have made a claim to Universal Credit, or from the end of the period in which they have been given to claim Universal Credit if no claim has been made.

The powers will also allow all Universal Credit managed migration claimants who miss the deadline to access backdating, if they make a claim within a month of the deadline day passing. This also means that anyone who misses their deadline day, but claims within a month of it will be eligible for transitional protection, the transitional housing payment and DWP legacy benefit transitional payment, where appropriate.

We will begin to use the powers to allow the managed migration from July 2019 when we start to migrate no more than 10,000 claimants as part of the testing phase. We will not increase those numbers until we are sure that we have the right processes in place. 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.

Q4: Regulation 46 says if a fresh claim for Universal Credit is not made within three months all benefits will terminate automatically. These changes are being made for DWP’s administrative convenience and not because the claimants’ entitlement to benefit is in question. Why is DWP putting those claimants, who, for a variety of reasons may struggle with the new claim, at risk of receiving no money at all?

A4: We are not manage migrating existing benefit claimants to Universal Credit for administrative convenience.

There are £2.4bn of unclaimed benefits not going to the people who need them, because they do not know about them. These regulations are vital to ensure that people missing out on benefits in the legacy system will receive them. When migration is complete, 700,000 more people will get paid their full entitlement because of Universal Credit, a million disabled people will be better off, and everyone that is managed migrated onto Universal Credit will be eligible for transitional protection. When it is fully rolled out we expect Universal Credit will boost employment by 200,000, lifting people out of poverty and generating £8bn in economic benefits every year.

There are a number of reasons why we are not automatically transferring claimants to Universal Credit:

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. This will mean a significant number of claimants will not need to attend a face-to-face interview.

Q5: One submission we received suggested that DWP is required to calculate the Transitional Element in any case, it could pay that figure to the claimant while their Universal Credit claim is reassessed and data is cleansed, rather than risking claimants’ benefits being stopped altogether because they struggle to engage with the process. Is that possible? Why has DWP not chosen to follow that route?

A5: We do not believe that this would resolve the issue of adapting to Universal Credit’s monthly assessment periods. If an award of Universal Credit was made at the beginning of the claim then the next award would not be due until the end of the second Assessment Period which would be approximately two months after the first payment. So all this would do is move the issue from Universal Credit’s first Assessment Period on until the second one without the scope to make advance payments.

Indeed, it would create an even longer period between their first and second payment of Universal Credit than there is currently now between their last payment of their existing benefit and the first payment of Universal Credit.

The following example demonstrates that using the Universal Credit Indicative amount as the first payment would create a two-month gap between the first and second payment.

“[i]f someone claimed Universal Credit on 14 July 2019, the first payment date would be 20 August 2019. If that claimant was paid the first payment on the 20 July, then the second payment would not be until 20 September. This would mean that the claimant would have a two-month gap between payments.”

To further illustrate this, we have compared DWP’s migration journey with the scenario of using the Universal Credit indicative amount as the first payment diagrammatically which I have included as Annex A.

We believe that the best option to help claimants to adjust to the different payment frequency is the two-week Transitional Housing payment, which has already been introduced for all those who move to Universal Credit, and the newly announced two-week DWP income-related benefit run on, which will be available, as previously discussed, from July 2020. Claimants are also able to access up to 100% advances, which are currently repayable over twelve months.

Q6: For those currently receiving Employment and Support Allowance (ESA), changing from fortnightly payments to monthly payments will require claimants to make adjustments that many will find complicated and stressful. Why can that change not be made separately within their existing benefits regime before transferring them over to Universal Credit, so they do not have to cope with too many changes at once? What is the rationale for not treating this group differently from those who are already paid monthly, say, the Tax Credits group?

A6: There are already claimants who are moving from Employment and Support Allowance to Universal Credit and adjusting to monthly payments. Benefit Transfer Advances are available to all those moving from existing benefits to Universal Credit to ensure that they are supported financially.

One of the key principles of Universal Credit is that it should prepare claimants for work, which is why the benefit is paid monthly. For people who are struggling to adjust to monthly payments, Alternative Payment Arrangements are available on Universal Credit.

Changing ESA payments to a monthly payment would mean that any issues that arise from claimants having to adapt to a new periodicity of payment would arise earlier whilst the claimant was still on Employment and Support Allowance. There are no inbuilt mechanisms in Employment and Support Allowance to help claimants adjust to this change as there are for Universal Credit such as the Benefit Transfer Advance and the two-week Transitional Housing payment. There would be no benefit to run on.

Q7: We were given the following example: an existing claimant who initiated their claim for Universal Credit on 14 July would receive their first payment of Universal Credit on 21 August. Although they will eventually be paid for every day claimed, in the interim they would be paid their existing benefits up to their date of new claim, plus a two-week “run on”. For ESA claimants who are paid fortnightly, that appears to us to require the claimant to survive the five and a half week changeover period on a maximum of four weeks’ money, less if the claim for Universal Credit is made mid-cycle. Is this correct? If so, how does DWP justify putting the claimant into hardship and debt during the changeover period?

A7: For clarification, the example was to demonstrate that the suggestion (raised in question 5) is not workable, as it creates a two-month hiatus between the first and second UC payment and, consequently, would create further hardship for the claimant.

The question here relates to the funds to which a claimant has access during the five-week period from the point at which they make a Universal Credit claim and the first payment date. Claimants will receive whatever remaining entitlement that they are due from legacy benefits when they make their Universal Credit claim; how much this payment will be and when it is received will depend on individual circumstances. Claimants will also be able to access additional funds through the out-of-work DWP benefit run on, which will be available from July 2020, and the Transitional Housing payment, where appropriate, which is already available for claimants moving from existing benefits to Universal Credit. The run-ons and Transitional Housing payment provide a stepping stone for claimants, where they receive an additional two weeks’ legacy payment before the first Universal Credit payment for the whole period of entitlement arrives.

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.

Q8: What guarantee can DWP give that the reassessment and data cleansing of each new claim to Universal Credit will be completed within the projected deadline to enable prompt payment? What emergency provisions has DWP put in place to assist claimants whose assessment takes longer than that, and who are at risk of having no income until that assessment is done?

A8: The Government is committed to ensuring that people do not fall through the gaps owing to gaps in the delivery process. Claimants will be called to claim through a migration notice. Claimants will be given a minimum of three months to make their claim to Universal Credit, although longer periods can be given if considered necessary and the period originally given can be extended as appropriate. This means that the Department has the flexibility to manage the flow of households migrated to Universal Credit, which means that we have the discretion not to issue a migration notice until we are sure that the claimant is prepared for the claim process. This will ensure that DWP will be able to move claims across promptly and within the deadline. We have already committed to a four-six month warm up period and are working closely with stakeholders and delivery partners to understand the best way to contact claimants and support them through the process to successful completion of a Universal Credit claim. The inclusion of the Discretionary Hardship payment in the regulations allows the Department the flexibility to provide additional support where it deems the claimant is in hardship owing to managed migration.

Impact

Q9: The EM estimates that about 900,000 households will receive Transitional Protection, and most will receive a two-week ex gratia “run on” payment. Given the huge numbers of people and sums of money involved we are disappointed that no more recent Impact Assessment than 2012 has been provided to inform Parliament’s consideration. Please can you provide us with estimates of the anticipated cost of the transition that these Regulations would enable?

A9: These measures have no direct impact on business and therefore a mandatory Regulatory Impact Assessment is not required. The regulations give effect to managed migration which is a core part of the design of Universal Credit and the impacts discussed in the Universal Credit Programme Full Business Case, which was published in June 2018.32 We will be spending over £3bn on transitional protection. In addition, they give effect to the transitional measures (Severe Disability Premium claimants, the DWP out-of-work benefit run on and extension of the MIF start-up period) set out at Budget 2018 which will involves extra spending of:

2018–19

2019–20

2020–21

2021–22

2022–23

2023–24

£m (spending)

35

90

170

255

240

205

Source: HM Treasury, Budget 2018: policy costings, (October 2018): https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/752208/Budget_2018_policy_costings_PDF.pdf

These benefits for claimants will not be realised if the regulations are not approved by Parliament.

For clarification, the run on will not be an ex gratia payment. It will be a run on of a claimant’s existing entitlement and would be fully supported legislatively by the introduction of these provisions.

Q10: Considering the extensive engagement described in the EM to provide insight into the issue landlords and local authorities face and “to protect their financial position” we were surprised that paragraph 12.1 claims that there is no impact on business, civil society organisations or the public sector from these regulations. Does that mean that DWP is contemplating some form of compensation to redress the “new burden”? Can you please describe what measures are being taken to ease the knock-on effects of the migration on these groups?

A10: A Regulatory Impact Assessment relates to the consideration of any additional direct costs and obligations that the regulations legally impose on business, including, where appropriate, landlords and local authorities. These regulations allow for the introduction and support of existing claimants to Universal Credit, including the consideration and award of Transitional Protection where appropriate; and protection for claimants who are in receipt of the Severe Disability Premium or have already moved to Universal Credit having been in receipt of the Severe Disability Premium

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. We attempted to address the broader impact in the remainder of Section 12 of the Explanatory Memorandum. We take the point, however, about the clarity of language, and will remember it for future Memorandums.

Capacity

Q11: The Committee did not initially understand why, if the pilot process starts in July 2019, the two-week “run on” payment does not come into effect until July 2020. We were told that this is “because it has to be automated”. What reassurance can you give us that the necessary computer software will be ready in time?

A11: The Universal Credit System is currently not designed to support the issue of a two-week run of either Employment and Support Allowance, Income Support or Jobseeker’s Allowance from the existing benefit computer system. Re-designing these systems will take some time. If payments of the run-on were to be introduced before we have automated their payment then this could only be made by a manual administrative process. Manual administrative process are slow and can be resource intensive which would draw necessary resource away from other parts of our benefit delivery.

We have considered the implementation requirements of the run on and timeline carefully. 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.

The up to 10,000 claimants who will be managed migrated before July 2020 will have access to Discretionary Hardship Payments where they experience hardship as a consequence of their move to Universal Credit.

Q12: Several of the powers sought in these regulations are discretionary, for example the power under regulation 45 to prevent someone’s benefits being stopped “where there is good reason to do so”, or, in the first year, to make an additional run on payment “if the applicant appears to be in hardship”. Given that it is DWP that is initiating the disruption to the claim, why are these provisions not automatic? Why does the legislation allow for individuals to receive different treatment at different points in the transitional protection?

A12: The powers under regulation 45 give the Department additional flexibilities to extend or cancel the migration notice, if there is a good reason to do so. DWP has provisions in existing legislation that are contingent on good reason33; this is a well-established practice, which ensures that claimant needs can be met, rather than constraining the Department’s ability to act in the favour of the claimant.

With regard to the run on (regulation 4 and 5), this is not a discretionary power. The power for Discretionary Hardship payments is broad but the Department intends to use it to pay the 10,000 claimants who will be managed migrated as part of the testing phase the equivalent of their two-week legacy run on, where there may be hardship, so that they also benefit from this additional support. We will also have the discretion to make payments if any other issues related to managed migration have resulted in hardship. We will keep this under review throughout the test period.

There is already a Discretionary Housing payment, administered by local authorities, which provides support for claimants where there is a housing costs shortfall. Again, the discretionary power ensures that claimant support is driven by an assessment of individual needs, rather than legislating for particular groups and constraining the Department’s ability to act in the favour of the claimant.

26 November 2018

Annex A: Diagram comparing DWP’s migration journey with the scenario of using the Universal Credit indicative amount as the first payment

 

32 Department for Work and Pensions, Universal Credit programme full Business Case summary (7 June 2018): https://www.gov.uk/government/publications/universal-credit-programme-full-business-case-summary

33 For example, in the ESA Regulations 2008 – regulations 22, 23, 24, 37, 38, 39 use good reason when assessing LCW and LCWRA.



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