The Department of Work and Pensions (DWP) begins its latest roll-out of Universal Credit to existing claimants

From April, recipients of child tax credits, income support and housing benefit will begin to move onto Universal Credit (UC). According to information from GOV.UK, half a million people will receive notifications instructing them to migrate to Universal Credit. The roll out will be conducted in waves, with deadlines shown in the diagram below. 

While the process seems clear, there are still concerns as an unexpected amount of people are not claiming Universal Credit after receiving their migration notice. The National Audit Office (NAO) reveals 1 in 5 claimants did not switch to UC after their notice, meaning their legacy benefits have stopped. 

Stakeholders like housing providers and local authorities have reported to Quids in! feeling left in the dark. They fear large numbers of people will not receive the information and support they need to make a successful transition. Implications for landlords include instances of non-payment of rent, where low-income earners lose out on vital financial aid as housing benefit currently covers rent through direct payments.

While the notification letter provides instructions and resources for claiming Universal Credit – DWP Migration Notice Helpline and Citizens Advice Helpline – the complex nature of the transition process has left many claimants unprepared.

BITTER EXPERIENCE

The news will come as a shock to many claimants. Laura told Quids in!: “The letter was the first I’d heard…. I have been receiving Child Tax Credits for years, but never even considered myself to be a benefit claimant- I work and have a child, so saw the tax credits as just a top up to my wages. I didn’t really perceive Child Tax Credits to be any different to Child Benefit.”

Jeff Mitchell, Editor of Quids in! magazine, said: “What claimants tell us is that moving onto UC can be really daunting. They put off doing anything about it until their income from their previous benefits have stopped and then it takes weeks to get the new system started. Then many fall into the various pitfalls, which have not been spelt out to them before, like having the right kind of bank account or managing a months’ budget paid in arrears.”

For those moving off Housing Benefit, they have to take account of paying rent that might previously have been direct to the landlord. For some vulnerable people, that’s a big responsibility and a risk to their landlord. Others just aren’t online. 

THE STORY SO FAR

Described as the biggest ever shake-up to welfare, Universal Credit was introduced with the aim to simplify the benefits system and incentivise work. The concept was first proposed by the Coalition Government in 2010 and officially rolled out by the Conservative Government in 2013. It was designed to replace six existing means-tested benefits and tax credits with a single monthly payment, including Income Support, Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance, Housing Benefit, Child Tax Credit, and Working Tax Credit. 

Despite its intentions to streamline the benefits system and encourage employment, Universal Credit has faced numerous criticisms and challenges since its inception.  For some groups, like working families in rented accommodation, they will be nearly  £3,800 per year better off in 2024-25. However for more vulnerable groups, like people with disabilities and mental or physical health challenges, switching to UC may leave them worse off. Take, for example, someone with a long-term disability unable to work—they could end up losing £2,800 a year.

The process of switching to UC itself is proving difficult with the main challenges being significant delays,  administrative problems,  and lack of support. Many individuals reported waiting weeks, or even months, for their first payment, leading to financial hardship, rent arrears, and reliance on food banks.  People are experiencing heightened anxiety as a result, which can further exacerbate their inability to cope with the transition. For those already dealing with mental health issues, Set up to Fail discovered that 57% felt their mental condition made it harder for them to “apply for and manage their UC account.”

Charities across the UK are urging the Government to establish more comprehensive and inclusive processes in legislation to limit “serious consequences for vulnerable benefit claimants.” 

Concerns have also been raised about the digital-first approach of Universal Credit, which requires claimants to apply and manage their benefits online. This poses accessibility issues for individuals with limited digital literacy or internet access, exacerbating barriers to claiming entitlements.

Other concerns include reduced entitlement compared to legacy benefits and five-week wait times. The public is not happy and it shows, with 66% of people thinking the UC standard allowance is too low. Data backs these concerns as research from JRF and Trussell Trust shows a single adult needs at least £120 per week for essentials compared to the £85 they will receive through UC standard allowance. 

Without sufficient income support people are pushed further from the labour market and are more at risk of social exclusion, homelessness, and detrimental health outcomes.  

WHERE NOW?

The government has pledged to address key issues and improve the system’s effectiveness. Payment of the housing element of a UC claim has been reformed to ease the transition and the DWP has issued certain interventions like reminder calls, home visits, and community outreach to ensure claimants don’t miss the extended deadline. Enhanced support services, largely led by the Help to Claim program delivered by Citizens Advice, were also promised.

Campaigners, however, feel the pace of migration is too fast. The Child Poverty Action Group said, “Managed migration is about to expand to DWP legacy benefit claimants – a much more vulnerable cohort – and a process that works for ‘most’ people will not be sufficient. The stakes are much higher for these claimants as benefits will be their primary, often sole, source of income. Those who do not successfully move to UC may find themselves without any financial support at all – at risk of destitution or threatened with homelessness.”

It is now expected that the full migration of claimants from legacy benefits to UC will not be complete until 2028/9. The last group to transition are due to be long-term recipients of Employment and Support Allowance, largely people unable to work through illness or disability. In the meantime, all new claims for support from low-paid workers and unemployed people will be for UC.

The DWP remains confused as to why large numbers of individuals are not switching over, leaving important questions about the effectiveness of the transition process unanswered.

The Quids in! Guide to Universal Credit has been updated to meet the needs of claimants moving off legacy benefits as well as still being relevant for new claimants. It aims to create a sense of urgency while also reassuring that the process is not as daunting as it may seem. Version 13 of the Quids in! Guide to Universal Credit offers 32 pages of independent, accessible information about the process and the pitfalls to avoid.

Background image: Tzido Sun / Shutterstock