1. 1 Welfare to Work Convention Manchester 9 and10 July Universal Credit - breakout sessions

2. 2 The Reform Story

3. 3 Overview (1) The Reform Story “A system that was originally designed to support the poorest in society is now trapping them in the very condition it was supposed to alleviate” Iain Duncan-Smith, Secretary of State for Work and Pensions The Welfare Reform Act introduces the most fundamental reforms to the social security system for 60 years. It aims for a simpler, fairer benefits system and to ensure work pays. Money needs to be targeted more effectively; we have to ensure that support continues to be available to those who need it most. Employment must be an aspiration for everyone who is able to work. Our services need to change to reflect the diversity and complexity of the issues that many people in society face today, requiring more joined-up working across government and beyond.

4. 4 Overview (2) The Reform Story We are introducing greater fairness to the welfare and pensions systems by making work pay and reinvigorating incentives to save for retirement, whilst protecting the most vulnerable – disabled people and pensioners. The nation’s finances also need to be put on a more sustainable footing – while this means making difficult decisions on tax and spending, we believe it is possible to do this and help people lift themselves out of poverty, and stay out of poverty, through work and saving backed by the right support and encouragement. Our Reforms will: - ensure people are always better off in work than on benefits - provide unconditional support for disabled people that need it - prepare the long term unemployed for the world of work - ensure people receive a fairer pension and are encouraged to save for retirement - support separating families.

5. 5 JanuaryThe Shared Accommodation Rate was extended to under 35’s MarchSocial Justice: Transforming Lives published AprilJobseeker’s Allowance Domestic Violence Regulations came into force »Local Housing Allowance rates frozen May Time limiting for Employment and Support Allowance claimants in the Work Related Activity Group came into effect Lone Parent Income Support entitlement changed for new and repeat claims Direct mail activity alerting claimants to the fact they may be affected by the benefit cap began Tougher benefit fraud administrative penalty came into force The Story so far: January - May 2012 The Reform Story

6. 6 May-NovemberLone Parent Income Support entitlement changed for existing claims June Direct Payment Demonstration Projects began JulyLocal authority/DWP data sharing regulations to support welfare services came into effect AutumnUniversal Credit local authority pilots began October The revised Jobseeker’s Allowance sanctions regime implemented Civil penalty for negligently giving incorrect information / failing to report a change in circumstances came into force DecemberThe revised Employment and Support Allowance sanctions regime was implemented 2012 child maintenance scheme opened on a pathfinder basis The Story so far: June - December 2012 The Reform Story

7. 7 January Single Tier Pensions White Paper published AprilUniversal Credit Pathfinder – start of early Universal Credit rollout in Manchester and Cheshire areas Benefit cap came into force for new and existing claimants in Bromley, Croydon, Enfield and Haringey local authorities Removal of the spare room subsidy came into force Controlled start for new claims to Personal Independence Payment for those living in the North West and parts of the North East of England Introduction of Localised Support for Council Tax Community Care Loans and Crisis Grants abolished and new Local Welfare Provision introduced Publication of Social Justice: transforming lives – one year on JulyRoll-out of Universal Credit in Wigan The Story so far: 2013 The Reform Story

8. 8 Social Justice The government published its Social Justice strategy “Transforming Lives” in March 2012. Previous approaches to tackling disadvantage and social exclusion have focused on increasing income levels of poorer families to bring them above a notional poverty line. More working age adults live in poverty than ever before. Social Justice sets out new approach to understanding and tackling the root causes of poverty rather than its symptoms. Social Justice principles will increasingly influence our overall direction, our policies, and the delivery of DWP services. Social Justice

9. 9 Welfare Reform and Universal Credit A policy A benefit A gateway A platform An ambition that tackles welfare dependency, poverty and worklessness by making work pay that replaces a complex system of working-age (in/out work benefits and credits) with the Universal Credit and a single set of rules that together with our employment support programmes, helps people into work largely self service; internet-age and digital - whilst continuing face-to-face support for those who need it transforming lives and society through work

10. 10 Universal Credit (UC) replaces six in work and out of work benefits UC is formed around a new ‘claimant commitment’ which sets out what is expected in return for assistance Claimants will be able to claim their benefits online A single payment will be made to a household rather than an individual. This will include housing costs. It will be paid monthly, in arrears. As claimants earn more money, financial support will be withdrawn at a slower rate than is the case under the current system. Local support will be available to help claimants where appropriate, through DWP and local authority delivery partnerships. Universal Credit – the service

11. 11 Andy Chiga and Felicity Ridgway 10 July 2013 universalcredit.pbs@dwp.gsi.gov.uk Welfare to Work Convention Personal Budgeting Support

12. 12 REQUIREMENT FOR A PERSONAL BUDGETING STRATEGY IS DRIVEN BY THESE CHANGES Context - Claimant Preparation 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

13. 13 Personal Budgeting Support – overview Alternative Payment Arrangements Financial products Money advice Claimants managing their money

14. 14 Alternative Payment Arrangements 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.

15. 15 Alternative Payment Arrangements – consideration factors 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

16. 16 Alternative Payment Arrangements – consideration factors 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

17. 17 Money advice Money advice will include: –Online budgeting tools for claimants who can help themselves - such as those offered by Money Advice Service and Citizens Advice. –Advice services offered by external organisations for those who need more support with, for example, getting a bank account or doing a monthly budget plan. Advice will be delivered through online, telephone and face-to-face channels by expert providers at a national and local level through the Local Support Services framwork. A personal planner is available on gov.uk to help claimants understand and prepare for financial changes arising from the introduction of Universal Credit. It 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. We are also trialing the new concept of a Budgeting Club for new and existing claimants. This will provide face to face practical help to claimants, initially in a group setting and subsequently on a one to one basis if needed.

18. 18 Financial Products 75% 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 accounts. Having access to a transactional account will enable claimants to make electronic payments out of the account – such as Direct Debits or standing orders – for bills such as rent, gas and electricity. Up to 1.3 million potential UC claimants currently do not use a transactional bank account to manage their benefit payments. Most of these individuals currently use a Post Office Card account (POCa) which does not offer transactional facilities. We are looking at ways to make accounts with budgeting functionality, such as ‘jam jar’ accounts, more widely available. We are consulting with financial providers across the private, social and third sectors and considering the best ways to make these types of products more available.

19. 19

20. 20 01/01 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 UC Payments 30/0 28/02

21. 21 More Frequent Payments: bi-monthly 01/01 Date of Claim +7 days 31/01 28/02 ½1 st Payment (a) Received by Claimant: 07/02 ½2 nd Payment (a) Received by Claimant: 07/03 Regular UC Assessment Period ½3 rd Payment (a) Received by Claimant: 07/04 1 st Payment (b) Received by Claimant: 21/10 2 nd Payment (b) Received by Claimant: 22/03 (14 days) (15 days) (16 days) 31/03 1 st UC Payment Calc/notification to claimant: 01/02

22. 22 UC Advance: new claims 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: £1000 2 nd payment: £1000 Standard Monthly Payment Payment minus repayment of UC advance (new claim) UC Advance (up to 50%) £500 £926.67 (3 days) Based on an indicative claim of £1000 pcm

23. 23 UC Advance: benefit transfers A claimant can will be offered an advance of up to 50% of their indicative UC award. Our current assumption is that the advance will be issued half way through the initial claim period. The advance will be recovered from UC payments in equal deductions over the following 12 months. +7 days 31/01 28/02 Regular UC Assessment Period (19 days) 1 st payment: £1000 2 nd payment: £1000 Standard Monthly Payment Payment minus repayment of UC advance (benefit transfer) UC Advance (up to 50%) £500 £958.34 (19 days) Based on an indicative claim of £1000 pcm

24. 24 Thank you and any questions?