Appendix 2: Draft Universal Credit (Managed Migration) Regulations 2018
Other issues raised with DWP
Severe Disability
Regulation 64 and Schedule 2, make provision for around half a million claimants currently in receipt of the Severe Disability Premium (SDP) to be held back until managed migration begins to ensure that they receive Transitional Protection. SCOPE asked why the same protection is not offered to those in receipt of Enhanced Disability Premium and Disability Premium, both of which are unavailable under Universal Credit.
DWP responded:
“In designing Universal Credit, one of the key aims was to simplify the existing system. For people with health conditions and disabilities, a conscious choice was made not to replicate every aspect of disability provision in the current system, which contains seven different disability payments. Instead, the right levels of support can be provided through two rates of payments, reflecting the current Employment and Support Allowance components.
Savings from this simplification are reinvested to increase the level of financial support available in Universal Credit for severely disabled claimants. As part of their Universal Credit award, claimants who have limited capability for work and work related activity are entitled to an additional £328.32 per calendar month. The rate in Universal Credit for these claimants of £328.32 per month is substantially higher than the equivalent rate of £163.15 per month in Employment and Support Allowance.
The purpose of these transitional payments is not to mirror transitional protection. Rather it is to provide a level of targeted support for former SDP recipients that is broadly in line with the value of the SDP and that can be delivered in a straightforward and timely manner. The monthly SDP transitional payment rates are not directly aligned to the existing Severe Disability Premium rates, as the amounts that we will be providing reflect the extra financial support that has been provided through Universal Credit’s more generous limited capability for work and work-related activity addition where that is in payment.”
The Child Poverty Action Group also enquired why the provisions in regulation 64 and Schedule 2 do not appear to make equivalent protections or transitional payments for families with disabled children “who stand to lose about £30 per week in the changeover”. DWP responded that the Government made a commitment that no one on existing benefits whose circumstances remain unchanged and has entitlement to the same support will lose out in cash terms as a direct result of managed migration.
Change in circumstances
Although Transitional Protection is provided to maintain income levels for those migrated to Universal Credit, Child Poverty Action Group says it can be easily eroded or lost due to commonplace changes of circumstances, such as rent increases, or the birth of a child. We asked whether there is any provision to prevent people losing their Transitional Protection when there is a change in their circumstances that requires a revised claim.
DWP responded:
“The Government made a commitment that no one on existing benefits whose circumstances remain unchanged and has entitlement to the same support will lose out in cash terms as a direct result of managed migration. …Transitional Protection, however, is not supposed to continue ad infinitum. It is designed to protect the level of a household’s award at the point of transfer. It is designed to offer financial parity with the claimants’ household incomes at the point of their migration, while, at the same time, it will allow for managed migrated Universal Credit claimants to reach parity with new Universal Credit claimants in similar circumstances. … However, transitional protection will erode or end when the claimants’ circumstances underlying the award are no longer recognisable to those on which the benefit calculation was made (i.e., it is no longer a like-for-like comparison). Therefore, transitional protection will end altogether if a claimant’s circumstances change significantly.”
Treatment of the claimants’ savings
The amount of savings a claimant is allowed in Universal Credit, £6,000, is lower than the £16,000 allowed in some of the legacy benefits. The transitional arrangements are described in paragraph 7.32 of the EM but we did not fully understand the assumption that “every £250 over the £6,000 ceiling will yield an income of £4.35 pounds a month”. [emphasis added]. DWP explained:
“The formula for calculating the deductions from benefit is not intended to represent any rate of return that could be obtained from investing capital. It provides a simple method of calculating the weekly contribution which people with capital in excess of £6,000 are expected to make from those resources to help meet their normal living expenses. As there is no link with actual market rates, deductions remained unaltered throughout the period of rising interest rates, just as they have done more recently, when interest rates have been lower.”