Universal Credit (UC)

A briefing about how Universal Credit will replace current means-tested benefits from April 2013.

From April 2013 onwards, Universal Credit (UC) is starting to replace current means-tested benefits. This briefing will help you know when changes are planned, and how to help people through them. It gives details as we know them at the moment, but consultation is still underway so there may be tweaking to the system as it finally comes out.

Universal Credit

UC will be piloted in a few areas for new claims in April 2013, then in one district per region in October 2013, and for all new claims from mid 2014.  

Most existing claimants of means-tested benefits will be transferred to UC between 2014 – 2017.
 
UC will replace these benefits: 

• Income-based Job Seeker’s Allowance 
• Income-related Employment & Support Allowance 
• Income Support 
• Housing Benefit 
• Child Tax Credit 
• Working Tax Credit 

UC is intended to simplify the current system and make it more responsive to changes of circumstances, eg a change in earnings. 

How will UC be calculated?

The UC system will be operated by the Department of Work and Pensions (DWP). If people work, there will also be close liaison between the DWP, the HMRC and their employer to ensure they get the right money at the right time. 
 
Help for housing costs will come from UC. 

There are many similarities between the UC system and current means-tested benefits, e.g the rules about capital, residence in the UK, and the use of weekly appropriate amounts to calculate your entitlement. 
 

Example 1 

Mo is 24, unemployed and lives with his parents. He has no savings and is registering as unemployed. If he claims UC in the future he can expect to receive the relevant personal allowance – at the moment this is anticipated to be £56.25p per week.

Example 2 

Jenny is 30 and not working because of a disability. She receives DLA mobility low rate and care component middle rate. A medical assessment via the DWP has put her in the work-related activity group. She lives with her parents.

If she claims UC she can expect to receive £71.70 per week standard allowance and an extra £28.45p per week because she has limited capability for work. This gives her a total UC entitlement of £100.15p per week.

How will people claim?

Claims will be made mainly on-line, or by phone if they can’t claim on-line. People who do not have, or cannot cope with, the internet or phone will need help with claiming. The government has said that there will be alternative arrangements (eg a Helpline if you get stuck claiming on-line) for people who have problems with claiming.

How and when will people get paid?

UC will be paid into the claimant’s bank or building society account on a monthly basis. In exceptional cases the DWP may be able to pay them more frequently, or make payments to a third party.

If there is a delay in payment, or people need a loan, they can ask for some of your UC as a “payment on account”, to be repaid later.

The current rules about appointees and some costs (eg mortgage payments) being paid to third parties still stand.

There will be a 7 day waiting period before any UC is payable.

Will UC help towards Council Tax?

No, Council Tax Benefit has now been abolished. Each council will operate their own system to help people with council tax bills. It is estimated that many people under pension age may lose out here, and people may need help when asking for assistance towards their Council Tax Bill.

Will UC help towards housing costs?

Yes, housing costs (or the amount of your housing costs that are allowed) will be included as part of UC. Help towards rent which is currently paid as Housing Benefit will become UC.   

Help towards mortgage payments (Support for Mortgage Interest – SMI) will also be paid as part of UC. Many people may only get SMI for a limited period then it will stop. The current proposals are that if you do ANY paid work you will get no help towards your mortgage. People will need to check this so they know their position.

When UC helps towards rental costs. There are now restrictions about getting full help if you have spare rooms. This is called the “bedroom tax” – see our separate briefing on this. NB – the bedroom tax does not apply to owner-occupiers or people with shared ownership property.    

If people live in supported housing which is “exempt” for housing benefit purposes these housing costs will not be covered by UC, but will remain in housing benefit. 

Will UC be higher when people get DLA?

No, there is no link between the level of UC and DLA (or Attendance Allowance or Carer’s Allowance). The current system of disability premiums for means-tested benefits is being abolished.      

Additions to UC because of disability or ill-health will depend on how people are assessed in the Work Capability Assessment:   .

• If they have limited capability for work they will get an addition of £28.45p per week .
• If they have limited capability for work-related activity (i.e. they’re in the Support Group), they will get a higher amount, £34.80p per week. 

Example 3

Iggy is 43 and buying his flat with a mortgage. He is not working because of a mental health problem but has not passed the Work Capability Assessment . He receives low rate DLA care component.   He is paid the standard allowance of UC, (£71.70 pw) which is not reduced by his DLA. He can also expect to get help towards his mortgage interest but this will be for a temporary period.

Example 4

Bonnie is 28 and lives in a one bedroom flat rented from a private landlord. She receives DLA lower rate mobility allowance. She has just received an inheritance of £17,500.   Because her capital is over £16,000 she will not be entitled to UC. Before she had this money, she would be entitled to the UC at the basic rate and help towards her rent. However these housing costs would be limited to the rent for one room because she is under 35.

I'm on benefits now. Will I lose out when I switch to UC?

The government has said that no-one will lose out because of the new system. However, what they mean is that your payment will not be reduced when the new system comes in, but that you will not get yearly increases until your money is at the correct UC amount.

Other money coming in 

Earnings will affect UC. Workers will be able to keep a certain amount of their pay before your UC is reduced. The exact amount of this disregard will depend on your circumstances, e.g whether you have children, or housing costs or are disabled. However, if people are working they will not get any help towards mortgage costs. The rules about how much of your earnings you can keep without losing UC are much more generous for those who don’t have housing costs included in their assessment.      

Most other income will often reduce UC as well. However, Disability Living Allowance and Personal Independence Payment will not be taken into account.

Do people have to do anything else to qualify for UC? 

Yes. Part of the basic rules for UC is that they make a “claimant commitment”. This is about the activity they have to take part in around looking for work.

There are four different levels of this, called “conditionality groups” which describe what things they are supposed to do to move towards work:  

• All work-related requirements (includes looking and being available for work)
• Work-focused interviews and work preparation
• Work-focused interviews, or
• No work-related requirements        

If they have limited capability for work-related activity (i.e. they are in the support group as assessed by the DWP) they will not have work- related requirements in order to be entitled to UC.      

If they are in any of the conditionality groups which have to attend interviews, prepare for work etc and they do not act as required by the DWP they may be subject to “sanctions” if they do not comply with DWP instructions about looking for work. Sanctions can reduce or stop payment of UC.  

Is there a limit to how much UC?

Yes, there will be an upper limit (the benefit “cap”). For a single person this will be £350 per week, £500 per week for a couple or family.

However, it will not apply if the claimant, their partner or any dependent child is disabled, i.e. they are receiving DLA or Personal Independence Payment.  If the benefit cap applies, your housing costs are reduced to bring your total benefit payment down to the appropriate level.

Can you appeal if you don't agree with the DWP?

Usually, yes, although some changes are being made. You will have to ask for a Review of a decision before you are allowed to appeal.
 

Will I be able to get a community care grant?

No, these are being abolished. They will be replaced by a local system operated by your Council. Details are yet to be released about this. 
 
How can family or support workers help people?  
There are many changes in the new system and many situations where people with disabilities may run into problems. Those helping will want to check:  

• People have access to the phone or internet and help to claim UC.
• If they are switching to UC, help to make sure their money is not reduced and take any reductions up directly with DWP, by asking for Review or Appeal if necessary.
• If they are going through the Work Capability Assessment, they get help to ensure the Assessor understands their difficulties.
• If they are put in the wrong “Conditionality” group, they have help to put in for a Review and/or Appeal.
• If they have your money reduced because of sanctions, they have help to understand this and to ask for Review/Appeal.
• They have help finding out about your local council’s process for helping with Council Tax bills and one-off payments which will supersede DWP grants.
• If they have trouble budgeting for a monthly payment, they have someone to help you ask for payments on account or more frequent payments.
• They have regular help checking your payments and informing the DWP on-line of any changes.

More information

A lot of the detail about UC is subject to consultation and so there may be changes between now and the final system in place when people either claim for the first time or are transferred from their existing benefits.  
A full explanation of the changes as they are anticipated can be found at http://webarchive.nationalarchives.gov.uk/+/http://www.dwp.gov.uk/docs/uc-pip-claims-payments-draft-regs-2012-memorandum.pdf.

Most of the detail about UC is now sorted out, although there is still a lot of argument about some aspects of these welfare reform proposals generally, e.g. there are legal challenges against the bedroom tax which are going through court at the moment.  

Keep up-to-date through our site and through http://www.dwp.gov.uk/ which has a part of their site dedicated to UC.    

These three case studies around imaginary disabled people may be useful to show how benefits compare “before and after” welfare benefit reform - http://www.housingandsupport.org.uk/welfare-reform-case-studies

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Although we try to ensure that statements as to the law and other facts are accurate this report gives general guidance and does not aim to cater for individual cases. The Housing and Support Alliance and its sponsors cannot accept responsibility for any loss incurred as a result of relying on such statements, specific advice should always be obtained on individual cases. 

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