Fourteenth Report Contents

Instruments drawn to the special attention of the House

Draft Universal Credit (Managed Migration Pilot and Miscellaneous Amendments) Regulations 2019

Date laid: 14 January 2019

Parliamentary procedure: affirmative

Universal Credit (Transitional Provisions) (SDP Gateway) Amendment Regulations 2019 (SI 2019/10)

Universal Credit (Transitional Provisions) (SDP Gateway) (Amendment) Regulations (Northern Ireland) 2019 (SR 2019/2)

Date laid: 14 January 2019

Parliamentary procedure: negative

Our 8th Report of this session raised a number of issues about the Department for Work and Pensions (DWP) proposals for transferring the nearly three million people still claiming “legacy” benefits over to Universal Credit. We welcome the Department’s decision to follow two of our recommendations. Splitting the regulations to ensure that those who are currently claiming Severe Disability Premium are not disadvantaged by delay allows the House time to examine the other proposals in more detail.

Our previous report, informed by external expertise, raised a number of concerns about DWP’s ability to deliver the migration for which this legislation paves the way. Our particular concerns were about the “hard stop” requirement for all legacy claimants to make a new claim for Universal Credit and DWP’s ability to process those new claims at sufficient speed so that claimants’ payments were not delayed or disrupted. Those concerns remain unresolved.

We also recommended that there should be a pause to allow the outcome of the pilot phase to be properly evaluated before the bulk of the migration is permitted. The revised affirmative Regulations limit the migration initially to 10,000 claims converted. This will give DWP an opportunity to produce evidence to demonstrate that it has the capability to migrate the remaining nearly three million claimants to Universal Credit without disrupting their payments, and that its assessment methods are robust. This cautious approach seems to us to be more appropriate in view of the vulnerability of some of the claimants involved in the managed migration phase. Both DWP and Parliament will wish to examine the outcome of the pilot carefully before taking a view on whether the rest of the migration should proceed. This Committee will take particular interest in how the result of the pilot shapes the further regulations that DWP will need to bring forward to begin the bulk transfer of legacy claims, and will expect that legislation to provide a satisfactory solution to all the issues raised in this report

These Regulations are drawn to the special attention of the House on the ground that they give rise to policy issues that may be of interest to the House.

1.These Regulations have been laid by the Department for Work and Pensions (DWP), each with an Explanatory Memorandum (EM).

2.The Draft Universal Credit (Managed Migration Pilot and Miscellaneous Amendments) Regulations 2019 (the “revised Regulations”) set up the arrangements for the Department to move those who are currently receiving benefits under the old “legacy” system of different benefits1 and tax credits into the new system of Universal Credit, a process described as “managed migration”. These revised Regulations contain a new provision which limits the initial transition to 10,000 claims converted, thus creating a pilot phase. The Regulations are otherwise the same as the Draft Universal Credit (Managed Migration) Regulations 2018 (the “original regulations”), which they replace and DWP has confirmed that the information supplied in response to our previous questions is still accurate.

3.The Universal Credit (Transitional Provisions) (SDP Gateway) Amendment Regulations 2019 and Universal Credit (Transitional Provisions) (SDP Gateway) (Amendment) Regulations (Northern Ireland) 2019 (the “negative Regulations”) extract provisions from the original regulations which ensure that claimants of legacy benefits who are in receipt of Severe Disability Payments (SDP) are not able to claim Universal Credit until arrangements for Transitional Protection are in place. This prevents them losing money in the changeover due to the different way the benefits for disability are calculated. These instruments breach the 21-day rule, but come into effect on the same date as intended in the original regulations.2

4.We reported on the original regulations extensively in our 8th Report of this session,3 and the comments made by us, the Social Security Advisory Committee (SSAC),4 and by the four expert organisations which wrote to us still apply,5 as does the additional information provided in correspondence from the Secretary of State for Work and Pensions, the Rt Hon. Amber Rudd MP, published in Appendix 1 to our 8th Report.6

5.No formal Impact Assessment was provided with the original regulations and although DWP has given an undertaking to the SSAC to provide one, it is not yet available. Given the numbers of people affected by the Regulations and the costs, we find this disappointing, but some additional figures were provided in connection with our 8th Report.

Splitting the original regulations

6.One of the Committee’s major concerns about the original regulations was that they were attempting to do too much at once, and too quickly. DWP argued that the original regulations needed to be passed urgently to enable claimants in receipt of SDP to be removed from natural migration so that they could benefit from Transitional Protection.7 In correspondence, the Secretary of State told us that the provision of the Gateway for SDP claimants and the development of the “managed migration” programme were “inextricably linked”. We welcome her decision to reconsider that position, and that she has now laid separate regulations, following the negative procedure, which have the effect of creating the SDP Gateway.

7.These negative Regulations come into force on the same date as originally planned, to ensure that no additional claimants will be inconvenienced. Splitting the original regulations in this way allows the House a greater opportunity to consider the arrangements for the main migration. Given the concerns about the original regulations, we welcome the DEP’s decision to adopt a more measured pace.

The pilot phase

8.Another welcome change is that regulation 2 of the revised Regulations limits the migration initially to 10,000 claims converted. This provision creates a pause to allow the results of the pilot to be evaluated before Parliament is asked to approve regulations enabling the remainder to be migrated. The pilot stage will give DWP an opportunity to produce evidence to demonstrate that it has the capability to migrate claimants to Universal Credit without disrupting their payments, and that its assessment methods are robust. This cautious approach seems to us to be more appropriate in view of the vulnerability of some of the claimants involved and we await the outcome of the pilot with interest.

9.DWP has informed us that the pilot will use an iterative approach, initially considering about 500 claims and adapting their method from early findings. Although there has not yet been any decision on the location, DWP states it is likely to be restricted to one small geographical area, which can be expanded as required, in order to pilot the approach with a range of benefits and claimant characteristics. We are concerned that a single area may not provide information that is sufficiently robust to translate to national level.

10.In our 8th Report, we welcomed the Department’s intention to consult representative groups in formulating their migration arrangements, but considered that those plans should be far more developed before regulations permitting the full conversion to Universal Credit are put before the House. The House may wish to invite the Minister to confirm that consultation will be undertaken during the pilot phase and that the regulations enabling the next phase will take full account of its outcome. The Minister may also be asked to offer an assurance that all involved have a realistic idea of the degree of support that local authorities and voluntary agencies are able to offer to those claimants being transferred.

Issues not resolved

11.Our 8th Report set out a number of significant concerns about DWP’s ability to deliver the “managed migration” arrangements that this legislation sets up. This included:

The gap

12.Our most significant concern was DWP’s plans for the handling of the changeover period, which did not seem to us to offer sufficient certainty that claimants would not be obliged to take out repayable hardship loans to survive until their first Universal Credit payment.

13.In answer to a supplementary question relating to the original regulations, DWP provided an example10 that indicates that someone making a new claim for Universal Credit will normally receive their first payment just over five weeks later. For those being migrated from legacy benefits, residual money from their existing claim 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 five-week changeover period on a maximum of just four weeks’ money. If they claim Universal Credit mid-ESA-cycle they would 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 has sufficient money to cover the bills that arise during the changeover period.

14.We also quoted figures from the NAO report which illustrated DWP’s limited success in meeting their own target of completing the assessment of every new Universal Credit claim within the four-week period: in March 2018, only 79% of new claimants received their full entitlement on time, with 87% receiving at least part payment. DWP responded that it is consistently paying around 80% of claimants in full and on time at the end of their first assessment period, and that the latest published statistics show performance at 84% of claims paid in full on time, and 89% were paid in part on time at the end of their first assessment period.11 While we welcome this improvement, we note that this still equates to 11% of all migrating claimants being paid nothing after five weeks.

15.DWP argued that in many cases where payment is not paid in full at the end of the first assessment period, this was as a result of unresolved issues such as: claimants not accepting their Claimant Commitment or passing identity checks, or having outstanding verification issues, such as providing evidence of housing costs and self-employed earnings. These are exactly the types of issues we expect the less able claimant to struggle with.

16.We accept DWP’s statement that each claimant will ultimately receive all the benefit due to them, but remain of the view that the timing of those payments in the changeover period is as crucial for their welfare as the amount. Rent falls due on the same date every month, and the new Universal Credit payment may not be available in time to pay it in 11% of cases–that equates to hundreds of thousands of claimants in financial difficulty, as many will not have savings to fall back on.

17.Where there is a gap, DWP proposes that the claimant takes a repayable advance. There is, however, evidence that this can cause long-term difficulties, because the deductions to offset the sum “borrowed” will leave claimants with less than the sum which DWP has assessed that their household needs to get by, leading to a cycle of further debt. The NAO states that in 2017 average new claim advance repayments were around £43 per month, or around 8% of the average monthly payment.

18.Delays in assessment and 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.

19.We remain of the view that any system of “managed migration” must include provision which will ensure that a claimant is not forced into debt because they have been given insufficient funds to match their calculated needs for the duration of the transfer period, or because DWP cannot meet its own assessment deadlines. The House may wish to press the Minister for assurance on this point.

Conclusion

20.We welcome the changes that DWP has made to its regulations, but these are small changes to accommodate Parliamentary scrutiny. They do not, as we have explained, address the very serious concerns that have been identified with DWP’s plans for managed migration and the Department’s capacity to deliver it.

21.The revised Regulations limit the migration initially to 10,000 claims converted. This will give DWP an opportunity to produce evidence to demonstrate, to an extent, whether the system it devises can migrate claimants from legacy benefits to Universal Credit without disrupting their payments and their lives unduly. This cautious approach seems to us to be more appropriate in view of the vulnerability of a substantial proportion of the claimants involved in the managed migration phase. Both DWP and Parliament will wish to examine the outcome of the pilot carefully before taking a view on whether the rest of the migration should proceed. This Committee will take particular interest in how the result of the pilot shapes the further regulations that DWP will need to bring forward to begin the bulk transfer of legacy claims and will expect that legislation to provide a satisfactory solution to all the issues raised in this report



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

2 The 21-day rule is the convention that an instrument should not be laid before Parliament less than 21 days before it comes into force.

3 8th Report, Session 2017–19 (HL Paper 244)

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.

5 Child Poverty Action Group, Mind, SCOPE and the Trussell Trust. Their submissions are published in full on 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 28 January 2019].

6 8th Report, Appendix 1: https://publications.parliament.uk/pa/ld201719/ldselect/ldseclegb/244/24407.htm [accessed 28 January 2019].

8 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].

9 See regulation 65 of the Universal Credit (Transitional Provisions) Regulations 2014 as revised by regulation 3 of this instrument.

10 8th Report, para 36.

11 HM Government, Official Statistics: Universal Credit: 29 April 2013 to 13 December 2018 (22 January 2019): https://www.gov.uk/government/statistics/universal-credit-29-april-2013-to-13-december-2018. [accessed 30 January 2019].




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