1 Department for Work and Pensions Universal Credit & conditionality UNCLASSIFIED

2 Department for Work and Pensions Overview Recap - scope and design of Universal Credit Conditionality framework In work conditionality Sanctions Timetable for implementation

3 Department for Work and Pensions Universal Credit: Scope Universal Credit means the following benefits will no longer be needed… Income related Jobseeker’s Allowance Income related Employment and Support Allowance Income Support (including SMI) Child Tax Credits Working Tax Credits Housing Benefit Social Fund (budgeting loan elements) But the following benefits will still be available… Disability Living Allowance (will be replaced by PIP in 2013) Contributory Benefits (although earnings rules aligned) Child Benefit Pension Credit (that will include a Housing Credit to support those who rent, the intention is it will broadly replicate Housing Benefit rules & a new additional amount for children in the Guarantee Credit) Carers Allowance Council Tax Benefit replacement UNCLASSIFIED

4 Department for Work and Pensions Universal Credit: Design Universal Credit: lone parent with two children Disregard Taper UNCLASSIFIED

5 Department for Work and Pensions The Welfare Reform Bill sets out: –four types of work-related requirement –four conditionality groups No “partners” - each adult in a household will be placed into a group according to their individual capability and circumstances. Recorded in a claimant commitment Universal Credit: Conditionality framework No work-related requirements Work-focused interviews Work preparation All work-related requirements

6 Department for Work and Pensions In-work conditionality Previously … conditional out of work benefits, unconditional in-work benefits UC removes division – when should conditionality stop? In current system at around £70 per week / £3500 per year Under Universal Credit reach of conditionality higher: –Expected hours of work * NMW –Single claimant, max is 35 hours * NMW (£210pw) –Joint claimants, max is 70 hours * NMW (£420pw) Enables use of conditionality to drive progression / support retention

7 Department for Work and Pensions In work conditionality: challenges Cost / capacity issues … –In-work conditionality brings in around 1.5m more claimants Evidence … –Very limited evidence UK / international as to what interventions are effective in driving earnings progression Reasonableness … –Can we require claimants to leave a job to take a different one? –Impact on employers

8 Department for Work and Pensions In work conditionality: pilots We therefore intend to pilot and evaluate a range of interventions before national implementation Key areas we are interested in: –Requiring effective worksearch action –Interventions to improve employability e.g. mandatory skills referrals –Interventions to support childcare arrangements –Interventions to tackle negative attitudes to further work –Financial incentives Within these keen to explore the role that 3 rd parties could play in delivery –Is there a black box model? In process of developing long list of possible interventions Current aspiration to introduce pilots as soon as possible after UC launch

9 Department for Work and Pensions Universal Credit: Sanctions SanctionApplicable to:1 st failure2 nd failure3 rd failure Higher Level e.g. leaving employment voluntarily Claimants subject to all work- related requirements 3 months6 months3 years Medium Level e.g. failure to undertake all reasonable action to obtain work Claimants subject to all work- related requirements 4 weeks3 months Lower Level e.g. failure to undertake particular, specified work preparation action, failure to participate in a work-focused interview Claimants subject to all work- related requirements Claimants subject to work preparation and work-focused interview requirements Open ended until re-engagement followed by 1 week2 week4 weeks Lowest Level Failure to participate in a work- focused interview Claimants subject to work- focused interview requirements only Open ended until re-engagement

10 Department for Work and Pensions Oct ‘13 Apr ‘13 Oct ‘14Oct ‘15Oct ‘16 Oct ‘17 Test New claims from out of work customers Apr ‘14 Feb ‘11 Design & build New claims from in work customers “Natural” migrations as a result of changes of circumstances Managed migrations Legacy load JSA, ESA, IS, HB, WTC, CTC 8m 6m4.5m2.5m UC load When will we deliver Universal Credit?