Universal Credit managed migration: the next big challenge

Posted in: UK politics, Welfare and social security

Professor Jane Millar, Professor of Social Policy, IPR

There are just under one million people now in receipt of Universal Credit. By 2023 there should be, if all goes to plan, up to seven million households in the system. That is a lot of people and a lot of benefit claims still to be processed.

There are three ways to get onto Universal Credit. The first is through a new claim. The second is through an existing claim, when your circumstances change (this is called, in DWP terms, ‘natural migration’). The story so far has been about these two routes. Depending on where you live in the country and on your family situation (single, couple no children, family with children), new claims and natural migration have been the way in. And not without difficulties and problems, as we know.

The third route is due to start next year. This comes through being transferred from an existing benefit or tax credit to Universal Credit via a process known as ‘managed migration’. The roll out of managed migration will take place between July 2019 and March 2023. The DWP has recently published the draft of the regulations that will govern this, and an explanatory memorandum. And the Social Security Advisory Committee (SSAC) has issued a consultation document, calling for evidence to inform their response (deadline to SSAC 20th August).  Sir Paul Gray, outgoing SSAC chair, noting the ‘the challenges encountered so far’ has stressed the importance of this consultation, as the ‘move to full national rollout unquestionably raises those challenges to an even higher, more demanding, level’.

The draft transitional protection rules are set out in 14 pages of detailed regulations. This is not reading for the faint hearted. The welfare rights experts will no doubt be taking a close look. Here I just look at the central part of the story - how the DWP proposes to get around three million people from their current claims for benefits and tax credits (the ‘legacy benefits’) onto Universal Credit. The answer, as set out in part four of the regulations, is to end their current claim and require them to make a new claim.

Managed migration means making a new claim for Universal Credit

It is proposed that all current recipients will be sent a ‘migration notice’, informing them that all awards of their existing means-tested benefits and/or tax credits are to be terminated and specifying a ‘deadline day’ by which they must make a new claim for Universal Credit. This deadline day ‘must not be within the period of one month’ from the day of issue of the migration notice, which seems to mean that there will be a notice period of at least one month and possibly up to three months (that detail is not specified in the draft regulation). The current awards end on the day before the deadline day, which is called the ‘migration day’ (keep up, these terms may become very familiar as the managed migration gets under way).

Thus existing claims will be ended automatically and it will be the responsibility of the claimant to set a new claim for Universal Credit in train. The rationale for this is not immediately obvious but perhaps it is because our benefits and tax credits system in general requires people to make claims. We do not have a system that seeks to identify people eligible for benefits and then pay them. Instead the onus is on the individual to make a claim. And it is also the case that Universal Credit claims will require some different information from the legacy benefits, and therefore the information must be provided to make the assessment.

So everyone gets a ‘migration notice’ giving them at least a month’s notice of the need to lodge a claim for Universal Credit. What could possibly go wrong?  First there must be a risk that people will miss the deadline day for making their new claim. People miss deadlines all the time. The migration notice informing people that they are required to make a new claim may go undelivered, be lost, or not read, or the requirements not understood. This is quite a complex message to absorb and act upon.

Then, for those who do start their new claim, this is not always straightforward. The recent DWP full service survey showed some of the difficulties and problems people have had in making their Universal Credit claim. Only just over half of all claimants were able to make their claim online without any help. About half were able to complete their online claim in one attempt, a fifth took three or more attempts. About a third experienced difficulties in gathering the necessary information and documents. There are a range of barriers that could prevent some – possibly many – people from being able to complete their claim by the deadline day.

Much therefore needs to be done within DWP not just to communicate the requirements to make a claim in time, but also to make the system easier to access and use.  Not least because there could be serious financial implications of missing that deadline.

Miss the deadline - lose transitional protection

If you don’t claim in time, you obviously do not get any money from Universal Credit, until you do claim. But that is not the only financial loss. Those who miss the deadline day will not be eligible for the proposed ‘transitional protection’. There are some exceptions proposed (if missing was due to administrative error, or failure of the computer system, or if the claimant has a disability, or medical evidence of illness preventing a claim). But in general hitting that deadline day will be crucial.

Transitional protection is a familiar concept for those versed in the details of social security. When benefit rules changes, some people may lose out financially. So in order to protect people from a sudden fall in income, transitional protection kicks in. In the case of Universal Credit, it is only those who move onto Universal Credit through managed migration that are eligible for transition protection (the lack of protection for ‘natural migration’ was a key issue in a recent High Court ruling). The protection is in cash terms only, without any uprating over time. And it only continues as long as circumstances do not change, or until the Universal Credit award reaches the level of the previous award. Thus the transitional protection is limited in many ways, but it is certainly worth having, making it even more important not to miss that deadline day.

Note, by the way, that transitional protection is needed because some people get less in Universal Credit than they did in legacy benefits. Less money. Cuts in income. So some people will get a short term protection before they find themselves with a reduced income. As the recent Equalities and Human Rights Commission report pointed out, the cumulative impact of tax and benefit changes have fallen hard on disabled people and families with children. Not all these cuts are directly or only cuts in Universal Credit - the benefit freeze, the bedroom taxthe benefit cap and the 2-child limit are important parts of the story. But Universal Credit is now much lower than was originally proposed, as the Child Poverty Action Group has pointed out. Without these cuts, there would not be as much need for transitional protection.

Gaps in income between legacy benefits and Universal Credit

If you do claim on time, there is still a gap in benefit income between the legacy benefits and Universal Credit. After the claim is made, there is a month’s assessment period and then a week to do the administration before the first payment. So the process takes some five weeks by design. Current benefits and tax credits are paid weekly, fortnightly or four weekly in arrears. So there is likely to be a gap for claimants being migrated onto Universal Credit between the final payment of their legacy benefits and their first monthly payment of Universal Credit.

This sounds like a difficult prospect, to say the least. It will certainly leave some people with little or no money during the managed migration process, possibly for several weeks. For those without family or others to call on, this is likely to lead to debts and hardship, as we have already seen among new claimants to Universal Credit, with about two-fifths reporting financial difficulties in the full service survey.

There is some mitigation already in the system, including measures introduced in the 2017 Budget. There is the possibility of an advance of up to one month’s payment, but this must be applied for and then repaid from Universal Credit within 12 months. The ‘transitional housing payment’ keeps housing benefit in payment for two weeks, and does not have to be repaid. Some further measures were announced in June 2018, affecting capital rules, the disability premium, the treatment of childcare costs, and maintaining transitional protection for a new claim to Universal Credit within three months after a short-term exit into work. These are all welcome, but whether this overall package will be sufficient to deal with the scale and depth of the potential problems remains to be seen.

And it is also the case that in practice some people have been waiting longer than five weeks. The latest DWP figures, for payments due in February 2018, show that 83% of new claims to Universal Credit Full Service received full payment on time (i.e. after the five weeks processing) and 90% received some payment on time. There will always be some people who do not receive full payment on time because of verification requirements, and sometimes third parties (landlords, childcare providers) must also provide information. Of the 17% who did not receive their full payment on time, about one third waited a further four or more weeks. This is an improvement on the figures quoted in the National Audit Office report, but does still show that there are gaps due to late payments.

Ready to go or not?

These are draft regulations and so may well be changed, not least from SSAC input. But it is clear that managed migration is a massive challenge. It is no wonder that Sir Amyas Morse, head of the National Audit Office, in his letter to Work and Pensions Secretary Ester McVey again stressed that the ‘department must now ensure it is ready before it starts to transfer people over from previous benefits’.

The DWP is no doubt working hard on the process and the systems, although not helped by aspects of the design of Universal Credit, nor by ongoing policy tweaks and changes. Being optimistic, these proposals might generally work, especially if there is more recognition of the need to minimise financial hardship. But there will certainly be people and families for whom managed migration does not work smoothly – who miss their deadline day, who do not have any income to tide them over the gaps, who do not get access to advance payments, who suffer delays waiting for payments – and this must be of concern. As the roll-out goes on, we are likely to continue to see high levels of difficulty and stress. Universal Credit will stay in the headlines for some time to come.

 

Posted in: UK politics, Welfare and social security

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