Universal Credit Core Deck v5 December Universal Credit: Budgeting Support and Payments Centre for Economic and Social Inclusion 20 th December 2013 Felicity Ridgway UC Budgeting Support and Indebtedness

2 Universal Credit Core Deck v5 December 2013 Test & Learn End-state Service Development Transition & Migration Couples Children North West Expand scope, starting in Summer 2014 Expand scale, once scope expansion is safely tested Claimant Commitment Digital Jobcentre Universal Jobmatch Universal Credit timeline

3 Universal Credit Core Deck v5 December 2013 Roll out from October 2013 – Spring 2014 October to Spring 2014: Progressive roll out of Universal Credit begins to a further 6 Jobcentres across England, Scotland & Wales, with offices taking new claims to Universal Credit: –Hammersmith, Rugby and Inverness are now taking Universal Credit new claims –Bath, Harrogate & Shotton will take new claims by Spring 2014 October to Spring 2014: Claimant Commitment rolling out nationally to around 100 Jobcentres a month for new claimants to Jobseekers’ Allowance, to support cultural transformation: –25,000 Jobcentre Plus advisers retrained to deliver Claimant Commitment From October: 11 in-work progression pilots being delivered. From October: Improved digital services rolling out nationally across Jobcentre Plus: –6,000 new computers will be installed across the country, helping claimants search and apply for jobs online, claim on-line benefits and improve their digital skills.

4 Universal Credit Core Deck v5 December 2013 Roll out from Summer 2014 We will continue to expand our current live service and functionality: –From summer 2014 we will progressively start to take new claims for Universal Credit for couples –From autumn 2014 we will take new claims from families –Once it’s safely tested we will also expand the roll out to cover more of the North West of England. Our plans will allow us to make Universal Credit available in each part of Great Britain during 2016: –New claims to existing benefits Universal Credit replaces will close down –The vast majority of the remaining claimants moving onto Universal Credit during 2016 and 2017.

5 Universal Credit Core Deck v5 December 2013 Pathfinder Universal Credit Pathfinder Pathfinder is testing the new system with local authorities, employers and claimants in a live environment. It provides an opportunity to learn lessons before extending the service and bringing in more complex cases. Scope Pathfinder focuses on new single, unemployed people, with or without rented housing costs, in selected areas in Tameside, Wigan, Oldham and Warrington local authority areas. It started with Ashton-under-Lyne on 29 April. Wigan joined on 1 July, Oldham and Warrington started on 29 July.

6 Universal Credit Core Deck v5 December 2013 Pathfinder update All Pathfinder locations of Ashton-under-Lyne, Wigan, Warrington and Oldham are now taking claims to Universal Credit. The majority of claims from Universal Credit claimants in all 4 Pathfinder locations have been made online. Already seeing people moving into work as you would expect with this claimant group. Claimants making use of services provided by local authorities –Internet Access Devices –support to make a Universal Credit claim on line –Personal Budgeting Support Early evaluation of Pathfinder: Almost two-thirds of Universal Credit claimants think that the new system provides a better financial incentive to work Universal Credit claimants are doing more to get into work than jobseekers claiming under the current system 90% of Universal Credit claimants are making their claims online and over three-quarters (78%) of Universal Credit claimants also feel confident about their ability to budget with monthly payments

7 Universal Credit Core Deck v5 December 2013 Local Area Support for claimants with complex needs Budgeting Work Online Housing Support for claimants LA Services National Partners Local Partners Jobcentre Plus

8 Universal Credit Core Deck v5 December 2013 REQUIREMENT FOR A PERSONAL BUDGETING STRATEGY IS DRIVEN BY THESE CHANGES Housing costs direct to tenant Single payment to household Monthly Payment We want to help people to be able to manage their own finances successfully, whether they are in or out of work Personal Budgeting Support - Context

9 Universal Credit Core Deck v5 December 2013 Alternative Payment Arrangements Financial products Money advice Claimants managing their money Personal Budgeting Support - Overview

10 Universal Credit Core Deck v5 December 2013 For a minority of claimants, alternative payment arrangements may be required; these might include –paying the rent directly to the landlord –making more frequent than monthly payments –splitting the payment within the household We will also have the option to make rent payments direct to the landlord if a claimant reaches a certain level of rent arrears. These alternative payment arrangements will be considered on a case by case basis and assessed on their individual merits. When considering alternative payment arrangements, a series of Tier 1 and Tier 2 factors indicating potential support needs will be used to help to decide if these arrangements are appropriate to an individual. The decision about whether an alternative payment arrangement is suitable will be made by a UC adviser through the PBS process. Information from a third party i.e. the claimants’ representative, and / or their landlord can be used to inform a decision. Subject to a review, the goal being that claimants move to the standard payment over time supported by money advice. Alternative Payment Arrangements

11 Universal Credit Core Deck v5 December 2013 Tier One factors – Highly likely / probable need for alternative payment arrangements Drug / alcohol and / or other addiction problems e.g. gambling Learning difficulties including problems with literacy and/or numeracy Severe / multiple debt problems In Temporary and / or Supported accommodation Homeless Domestic violence / abuse Mental Health Condition Currently in rent arrears / threat of eviction / repossession Claimant is young either a 16/17 year old and / or a Care leaver Families with multiple and complex needs Tier Two factors - Less likely / possible need for alternative payment arrangements No bank account Third party deductions in place (e.g. for fines, utility arrears etc) Claimant is a Refugees / asylum seeker History of rent arrears Previously homeless and / or in supported accommodation Other disability (e.g. physical disability, sensory impairment etc) Claimant has just left prison Claimant has just left hospital Recently bereaved Language skills (e.g. English not spoken as the ‘first language’). Ex Service personnel NEETs - Not in Education, Employment or Training APA – consideration factors

12 Universal Credit Core Deck v5 December 2013 Money advice will include: –Online budgeting tools for claimants who can help themselves – e.g. by Money Advice Service –Advice services by external organisations for those who need more support with, for example, getting a bank account or doing a monthly budget plan. Local advice services will be delivered by phone and face-to-face by expert providers through the Local Support Services framework. The Local Support Services Framework is available on gov.uk: services-framework A UC personal planner is available on gov.uk to help claimants understand and prepare for financial changes arising from the introduction of Universal Credit: The Planner asks claimants a set of questions about their readiness for claiming Universal Credit and, depending on the answers given, sets out an individual action plan. Money Advice

13 Universal Credit Core Deck v5 December % of people are paid earnings monthly in arrears. Monthly payment of benefit will prepare households for the reality of budgeting on a monthly income, will ease the transition into work, and will make it easier for households to take advantage of cheaper tariffs for essential costs such as utility bills. The majority of Universal Credit claimants will continue to be paid through mainstream current or basic bank accounts. Having access to a transactional account will enable claimants to make electronic payments out of the account. Most claimants will be paid into a bank account but up to 1.3 million potential UC claimants currently do not use a suitable financial product e.g. POCA which doesn’t have transactional facilities. We are working with banks and other financial institutions to support claimants to open suitable accounts before they migrate to UC. We are investing £38 million into the modernisation and expansion of credit union services. A growing number of credit unions offer current account services as an alternative to mainstream bank accounts. Financial Products

14 Universal Credit Core Deck v5 December 2013 Landlord/Claimant Preparation In a speech at the Chartered Institute for Housing (CIH) in June 2013 Lord Freud announced an intention to work with landlords to see what work can be done in advance of Universal Credit to make the transition smoother for landlords and tenants. DWP now is working with trade bodies, housing associations (including stock owning Local Authorities) to explore how we might take this work forward. High level aims: –Working with landlords to help identify tenants who will need some help and support and prepare them in advance of the changes Universal Credit will bring; –identifying those who will need alternative payment arrangements; –move some tenants over to direct payments of Housing Benefit early. Work is on-going to finalise the scope of this work and develop a landlord preparation strategy.

15 Universal Credit Core Deck v5 December 2013 UC Payments Universal credit payments will be issued through the BACS system. Each claimant will be given a UC payday based on their date of claim. Once they have this payday, UC will be made on the same date each month thereafter. If the payday falls on a weekend or bank holiday, the payment will be made on the first closest working day prior to the normal payment date. The first payment will be made after the initial UC calculation period (one calendar month from the date of claim) + 7 days. New claimants and those transitioning from legacy benefits may be eligible for an advance of up to 50% of their indicative award to help them manage during the first assessment period if they need it. These UC advances will provide an interest-free lending facility for claimants who find it difficult to access mainstream credit, and could offer an alternative to high cost borrowing.

16 Universal Credit Core Deck v5 December /01 Date of Claim +7 days 1 st UC Payment Calc/notification to claimant: 01/02 1 st UC Payment Received by Claimant: 07/02 Regular UC Assessment Period 2nd UC Payment Calculation: 01/03 2 nd UC Payment Received by Claimant: 07/03 31/01 28/02 A Standard Claim… Example claim

17 Universal Credit Core Deck v5 December 2013 A claimant can request an advance of up to 50% of their indicative UC award. The advance can be claimed at any point during the first month and will be issued via BACS after 3 days. The advance will be recovered from UC payments in equal deductions over the following 6 months. +7 days 31/01 28/02 Regular UC Assessment Period (35 days) 1 st payment: £ nd payment: £1000 Standard Monthly Payment Payment minus repayment of UC advance (new claim) UC Advance (up to 50%) £500 £ (3 days) Example claim UC Advances: new claims

18 Universal Credit Core Deck v5 December 2013 Thank you and any questions?