Webinar Universal Credit 8th December Sue Royston and Kevin Gannon

Contents Rollout of Universal Credit Structure of Universal Credit What is the impact on people living in a ‘full service’ area Upper Tribunal Decisions on Universal Credit Questions

The rollout of Universal Credit

Policy context Welfare Reform Act 2012 Summer budget 2015 reduction in Work Allowances Different regulations for ‘full service’ areas Universal Credit (Digital Service) Amendment Regulations 2014 and Universal Credit (Surpluses and Self-employed Losses) (Digital Service) Amendment Regulations 2015  Welfare Reform and Work Act 2016 – in UC removal of LCW affects those in work as well as out Delays IT issues – and slow rollout from ‘live’ to full service’ UC ‘Test and Learn’

‘Live Service’ and ‘Full Service’ UC Universal Credit ‘live service’ areas Many gateway conditions – generally need straightforward claims Online application but then claim managed traditionally Universal Credit ‘full service’ areas Almost any new claim for a legacy benefit -so includes people in more complex situations Fully digital – communication through online “claimant journal” In November 2017 rollout slowed once again … https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/662950/universal-credit-transition-rollout-schedule.pdf

Structure of Universal Credit

UC: Some of the main features replaces all means-tested benefits for 'working-age' claimants: IS, income-based JSA, income-related ESA, HB, CTC and WTC; Online claim process. No paper form; monthly assessment and payment; most claimants need to accept a ‘claimant commitment’ dealing with work-related requirements; earnings reported to DWP via employer RTI sent to HMRC; 'two child limit' from April 2017.

UC: Assessment Process assessment is carried out for each ‘assessment period’; one calendar month beginning with the first date of entitlement; Step 1: calculate the maximum UC by adding together the allowances that apply, housing costs element and childcare costs element; Step 2: earnings: from earnings, subtract ‘work allowance’ if applicable – then multiply by 63%; Step 3: add up other income (e.g. other benefits that count); Step 4: add the figures in (2) and (3); Step 5: subtract (4) from (1) The amount in step (5) is the amount of UC that is paid. A single amount is paid – in theory- within 7 days of the end of the assessment period (except owner occupiers housing costs)

UC: Housing Costs (1) Renters In the UC system, what used to be HB, or mortgage costs for IS, JSA or ESA, are called the 'housing costs element’; rules for rent payments under UC housing costs are broadly similar to those in the HB scheme. LHA rules and bedroom tax rules apply as in HB; Non-dependent deductions (in UC terminology: 'housing cost contributions') are fixed at £70.06 per month, per non-dependent. There is no variation in amount depending on the non-dependent’s circumstances as in HB; possibility of applying for amounts to be paid direct to landlord;

UC: Housing Costs (2) Owner-Occupiers Loan interest payments can be covered, with a normal maximum of £200,000 and using a standard interest rate (3.12% at the moment); there is a waiting period of nine months before entitlement arises (subject to exceptions); there are no non-dependent deductions; if the claimant or their partner has earned income of any amount no owner-occupier housing costs element is included; the owner-occupier housing costs element is normally paid direct to the lender; from 2018 owner-occupier housing costs will be a loan.

Other features of the UC scheme ‘Alternative payment arrangements’ are possible. These can include paying housing costs direct to the landlord. Other types of Alternative Payment Arrangements are more frequent payments and/or splitting the payments between partners. significant sanctions regime for non-compliance with work-related requirements; Backdating UC is only possible for 1 month and only if one of the circumstances set out in reg 26(3) UC (Claims and Payments) Regs 2013 applies ; overpayments: s71ZB Social Security Administration Act 1992 provides that any amount of UC paid in excess of entitlement may be recovered. No need for the DWP to show misrepresentation or failure to disclose. rules on 'revision’, 'supersession’ and appeals as in other benefits apply to UC

What is the impact on claimants living in a ‘full service’ area

Overview of the impact Structural issues Admin Problems Before managed migration any new claim to UC means a loss of transitional protection Damages work incentives Creates a disincentive to move to more suitable accommodation in a different area Our report highlights many of the structural and admin problems in ‘full service’ UC areas https://cachd.org.uk/campaigning/universal-credit/

Some structural issues Wait before 1st payment Way final earnings are treated No Severe Disability Premium (SDP) in UC – loss of £62 a week Disabled child element reduced from £60 to £29 for most Reduction in additional support through elements and WAs Couples with one below pension age have to claim UC – no pensioner element Second earners in a couple face poor incentives to work -especially when both disabled Reduction in support for under 25s entitled to LCW or LCWRA Loss of mortgage interest in max amount in UC if do any work Income other than earnings is deducted £1 for £1 Issues for self-employed people Payment and reporting of childcare costs

A couple of positive changes in entitlement in UC compared to legacy benefits No earnings limit for carer element in UC Support element (LCWWRA) higher in UC - £52 in current system (supp + EDP), £73 in UC

Loss of transitional protection for those entitled to the SDP in the legacy system is causing large losses for some claimants in ‘full service’ areas SDP worth over £60 a week No equivalent to SDP in UC LCWRA is £20 a wk higher than entitlement for those in ESA(Income Based) with support component &EDP but no SDP Drop of over £40/wk (£2000 a yr) for those with LCWRA group Drop of over £60/wk (£3000 a yr) for those with LCW If change of circumstances then transitional protection is lost move to a different LA or try work of 16 hours or more/wk Loss of transitional protection likely to mean total loss of more than £14,000 for those currently receiving SDP

Administrative Issues Delays in awarding various elements including housing costs Those transferring from ESA to UC not automatically getting LCW or LCWRA- waiting for months Incorrect information from officials about who needs to apply for UC Misleading advice to apply for UC immediately – can lead to waiting 11 weeks instead of 6 removal of waiting days will exacerbate this problem

Overall impact on claimants in ‘full service’ areas People: claiming UC when they don’t need to and as a result losing thousands of pounds claiming UC too early and as a result losing hundreds of pounds Because of inaccurate or inadvertently misleading advice from officials Claimants more likely to be: In debt Face possession hearings Need referral to a foodbank Impact on claimants health

Mrs B … is​ ​a​ ​single​ ​parent​ ​with​ ​a​ ​little​ ​boy​ ​aged​ ​2 Mrs B … is​ ​a​ ​single​ ​parent​ ​with​ ​a​ ​little​ ​boy​ ​aged​ ​2.​ ​For​ ​a​ ​number​ ​of​ ​years,​ ​ she​ ​has​ ​been in the support group of ESA with the SDP. She​ ​ wanted​ ​to​ ​try​ ​to​ ​move​ ​into​ ​work.​ ​She​ ​contacted​ ​the​ ​DWP​ ​ helpline​ ​to​ ​tell​ ​them​ ​she​ ​was​ ​planning​ ​to​ ​start​ ​work​ ​and​ ​check that​ ​if​ ​she​ ​found​ ​she​ ​had​ ​to​ ​stop​ ​work​ ​because​ ​of​ ​her​ ​health​ ​ condition​ ​she​ ​would​ ​be able​ ​to​ ​return​ ​to​ ​her​ ​former​ ​benefits.​ ​In​ ​that​ ​call​ ​she​ ​was​ ​incorrectly​ ​advised​ ​that she​ ​could​ ​reclaim​ ​her​ ​ ESA ​at​ ​any​ ​time​ ​within​ ​12​ ​weeks​ ​of​ ​her​ ​ESA​ ​stopping.​ ​In​ ​a​ ​subsequent​ ​call,​ ​when​ ​she​ ​had​ ​to​ ​stop working,​ she​ ​was​ ​given​ ​further​ ​incorrect​ ​information.

…. As​ ​a​ ​result​ ​of​ ​those​ ​two​ ​calls​ ​she​ ​had​ ​to​ ​claim​ ​UC.​ ​​ Her entitlement​ ​under​ ​UC,​ ​even​ ​though​ ​she​ ​has now been LCWRA​ ​element,​ ​is​ still ​over​ £40​ ​ a​ ​ week​ (£2000​ ​a​ ​year)​ ​lower​ ​than​ ​on​ ​the legacy​ ​benefits – probably an overall loss in the region of £14000.​​ ​ Because​ ​of​ ​further​ ​administrative​ ​errors,​ ​she​ ​spent​ ​more​ ​than​ ​Five months​ ​on​ ​just​ ​the​ ​basic​ ​level​ ​of​ ​UC,​ ​a​ ​drop​ ​in​ ​income​ ​of​ ​£115​ ​a​ ​ week​ ​or​ ​£500​ ​a month, compared to the level she would have been receiving on ESA.

Upper Tribunal Decisions on Universal Credit

PT v SSWP [2015] UKUT 696 first UC case to be dealt with by the UT. C’s employment ended in December 2014. He claimed UC in early Jan 2015 . C argued earnings from employment previous to UC claim should not be taken into account at all. UTJ Jacobs analysed how earnings are dealt with under UC. Reg 54 clearly provides that the amount of earnings relevant for the UC assessment is based on the amounts actually received in that assessment period.

AM v SSWP [2017] UKUT 131 C attempted to claim UC on 18.7.2015 (Saturday) by completing the online claim form; unsure of amount of final earnings due so C answered ‘yes’ to question about exceeding £330. As a result, directed to claim JSA; no facility to claim JSA until 20.7.2015 (Monday). At that point directed to claim UC and answer ‘no’ to the question; C appealed in order to claim backdating of UC claim to 18.7.2015; UTJ Rowland considered reg 26. One of the circumstances available for backdating was that the DWP’s computer system was ‘inoperative’; UTJ Rowland was critical of the wording of the £330 question on the online claim form but that did not amount to the computer system being ‘inoperative’.

SSWP v RW [2017] UKUT 347 C had a UC ‘assessment period’ that ran from first day of the month to the last day. In February 2016, the RTI pay information showed that she received pay on 1.2.2016 and 29.2.2016; C said that she had in fact received the first of those amounts on 31.1.2016; C’s appeal against decision to count both amounts in the Feb assessment period allowed by FTT. DWP appeal; DWP then sought to withdraw the appeal making this concession: The circumstances in this case can be brought within the exception in reg 61(3)(b)(i) as the reporting of a payment by the employer after the date on which it was actually made can be considered a ‘failure’ by the employer …. appeal withdrawn but case reported as full text of concession useful.