This factsheet gives a basic introduction to the proposed universal credit. It is based on what we know so far and will be updated as we get more information.
You can find out detailed information about the current benefit system in Disability Rights UK's Disability Rights Handbook, available at www.radar-shop.org.uk/.
All our publications are available from our shop at www.radar-shop.org.uk/. You can also place an order by contacting Disability Rights UK on 020 7247 8776 (this is not an advice line) or by fax on 020 7247 8765. All our factsheets are available at www.disabilityalliance.org/fact.htm.
Universal credit (UC) is intended to be a new benefit which will replace:
It is an attempt to simplify the current benefit system and at the same time save money. However, in the short term, the new system is expected to be expensive to set up.
According to the Government the new universal credit system aims to:
What this means is that basically everyone who is on a low income should be able to claim universal credit. This means you may be able to claim it if you are unemployed and looking for work, working in a low paid job or are sick and unable to work.
If you have a partner you will make a joint claim for universal credit.
As universal credit sets out to improve work incentives there will be conditionality requirements set according to your individual capability and circumstance. There will be four broad conditionality groups:
You will be required to look for and be available immediately for any full time work regardless of type and salary, as long as it pays at least the National Minimum Wage and is within 90 minutes of your home.
There will exceptions to the immediate requirement to take up full time work if you are a volunteer, need to arrange childcare, are sick or are serving out the notice period of a contract of employment.
If you have a good work history, you may be allowed, for a maximum of 13 weeks, to limit your work search and availability to jobs that are similar in nature and carry a similar level of pay to your previous occupation. After this time you will be expected to look for and be available for any job.
You will also be expected to spend as much time searching for work as the number of hours you are actually available for work. For example, if you are expected to be available for work for 40 hours that is how much time you will be expected to spend searching for a job.
There will be exceptions to this rule if your personal adviser decides that you have undertaken all the work related activity that can reasonably be expected or if you are engaged in voluntary work (so long as your work search remains your primary focus).
This rule will also be relaxed if you are temporarily sick (this must be supported by medical evidence) or in certain other circumstances such as a domestic emergency or the death of a relative or close friend.
If you are a lone parent with responsibility for a child between the ages of 5 and 12, or an older child who has exceptional care needs, you will be able to restrict your work search and availability to work
If you are a member of a couple and have a child under 13 you will be able to nominate one member of the couple who will be treated in the same way as a lone parent for conditionality purposes (i.e. who will be able to place limitations on their work availability and work search as above).
If as a couple you choose to share the caring responsibilities you can do so as long as collectively you are both looking for work at least equivalent to one person working full-time and one person working as many hours as a lone parent would be expected to. In addition, you both must continue to have reasonable prospects of finding work within this limitation.
If you care for a disabled person, but do not satisfy the rules for the no conditionality group you may have your work search and work availability requirements limited to jobs that would not interfere with your caring responsibilities.
If you are in the full conditionality group but have a health condition or are undergoing regular treatment to manage your health condition you will be required to provide evidence of any limitations on what work (hours, nature of work, and location) you are capable of doing. This will be taken into account when setting work search and availability requirements.
If you disagree with your work availability and work search requirements, these will be reconsidered by the adviser. If the adviser does not agree to change your requirements you will be able to ask for your work search and availability requirement to be reviewed by another employment officer.
Under Universal Credit there will be three levels of financial sanction if you fail to comply with your work related activity requirements. These are:
You will still have the right of appeal against a sanctions decision. You will have to show that you had a good reason for non-compliance.
If you are sanctioned you may also be eligible for a time limited recoverable hardship payment.
So far we have no details on how much you will get under universal credit. This will depend on your level of income and other family circumstances.
There will be a basic personal amount which is similar to the current jobseeker’s allowance rate. It is intended that you will be paid at a lower rate if you are under the age of 25 though there will be some exceptions to this rule.
You may get extra UC:
Your total UC will be limited to £500 a week if you are a lone-parent or part of a couple or £350 per week if you are single. This benefits cap does not apply if you are in a household where:
Normally your UC will be paid as a lump sum each month to cover both daily and housing costs. You can choose who receives the benefit if you have a partner.
In exceptional circumstances you may be paid more frequently than monthly or else alternative payment methods may be arranged (such as if you cannot manage your affairs or if alternative payments are needed to safeguard the rest of your family).
The aim of universal credit is to ensure that everyone will be better off in work than staying out of work and on benefits. Because of this it is intended that you will be able to keep much more of your benefit when you move into work than is currently the case. Also by combining a number of benefits under a single set of rules you should be able to calculate quickly and easily just how much better off you are in work.
If you are in work, as your earnings rise, universal credit will be withdrawn at a constant rate. This will be around 65 pence for each pound of net earnings less a disregard of 50% of any pension contribution you make.
There will be higher earnings disregards for selected groups, for example if you are part of a couple with children you will get a higher disregard than a similar couple without children. There will also be a higher disregard for disabled people.
These disregards will be reduced to reflect the amount of support being provided for rent or mortgage interest support, so there will be a maximum and minimum disregard.
The minimum disregard currently suggested is:
The maximum disregard currently suggested is:
If you have income other than earnings this will usually be taken into account in full, so that the Universal Credit award is reduced pound for pound. However, your income will be fully disregarded if your living costs are increased by your personal circumstances such as:
Your income will also be fully disregarded where there is a disproportionate administrative cost in taking a particular type of income into account. This includes cases where you receive payments in kind, charitable payments or child maintenance payments where you are the parent with care.
Some income types will be treated as equivalent to earnings. These are statutory sick pay and statutory maternity/paternity/adoption pay.
If you have income from boarders or lodgers the earnings taper will only be applied to this income if you also have disregarded income.
The intention is that the savings/capital limit for universal credit will be £16,000 (both for single claimants and couples making a joint claim). If you have capital over £6,000 this will be treated as giving you an income (known as “tariff income”) of £1 per week for each complete £250 over this £6,000 floor. Capital under £6,000 will be disregarded.
The existing permitted work system for people who are sick or disabled will be replaced by a system that will not be time limited and which will encourage more disabled people, especially those with fluctuating capacity, to do some work, even if only for a few hours a week.
Universal credit does not include:
Carers allowance will be subject to further discussion as to how it will interact with universal credit.
Contributory jobseeker’s allowance and contributory employment and support allowance will be administered through the same system as universal credit and will have the same earnings rules as for universal credit.
Contributory ESA for those placed in the work related activity group is now limited to one year.
Council tax benefit - The Department for Communities and Local Government has consulted on proposals to replace the current council tax benefit system in England with local support for council tax. The Welfare Reform Bill contains provisions for council tax benefit in its current form to be abolished across the whole of Great Britain. Wales and Scotland will devise their own schemes.
The new local support will be outlined in a local government finance bill, which will be introduced in this Parliamentary session as well as in regulations. The Government will consult on the draft regulations.
It is intended that local authorities will establish their own local schemes by April 2013.
Disability living allowance and personal independence payment - These will not be part of universal credit. DLA for those of working age (16-64 year olds) will be replaced by a new personal independence payment. For information on this see www.disabilityalliance.org/dlatest.htm and Factsheet F60 - personal independence payments.
Passported benefits - It is intended that the passported benefits system will be reformed so as to gradually withdraw entitlements as earnings rise.
The Government commissioned the Social Security Advisory Committee to undertake an independent review of passported benefits and how they link with universal credit. You can view Disability Alliance's response to this at www.disabilityalliance.org/r72.htm.
Pension Credit - If you are part of a couple, and one of you is a pensioner and the other is of working-age, you will both be expected to claim universal credit. Whichever of you is of working age will then have to meet the appropriate conditionality rules.
Social fund - All social fund elements that can be automated, such as budgeting loans, will become part of universal credit. Sure start maternity grants and cold weather payments will be paid automatically when the qualifying criteria are met and so also will be part of universal credit.
The more discretionary elements of the social fund, which cannot be assimilated into universal credit, such as community care grants and crisis loans, will be devolved to local authorities.
War pensions - The Government is currently considering how war pension payments will be treated under universal credit.
If you are getting employment and support allowance (ESA) you will eventually be moved onto universal credit. There will still be a work capability assessment under universal credit.
If you are on incapacity benefits (incapacity benefit, severe disablement allowance and income support on disability grounds) you will be reassessed under the ESA Work Capability Assessment (WCA) instead of the Personal Capability Assessment and if you pass the test will be 'migrated' onto ESA between October 2010 and March 2014. This process overlaps with the conversion of ESA claimants to universal credit. As yet it is not clear how these two processes will interact.
You can find out more about the migration process at www.disabilityalliance.org/ibmigrate.htm. The timetable for migration overlaps with the proposed start date of universal credit.
Carer's allowance is not part of UC though if you claim UC you may be paid a higher addition if you are caring for someone who is disabled who is in receipt of a qualifying benefit.
If you get the carers element of UC you will not be expected to take part in a work related activity as a condition of getting benefit.
In its White Paper on the reform of the welfare system the Government announced its intention to provide support for carers and improve their opportunities to maintain links with the world of work. It is carefully considering whether changes to carer’s allowance will be necessary 'to take account of the introduction of universal credit and provide clearer, more effective support for carers'.
The law for the introduction of universal credit is contained within part 1 of the Welfare Reform Bill 2011. You can view a summary and link to the Bill at www.disabilityalliance.org/welfarereformbill.htm.
The timetable for phasing in universal credit is as follows:
No-one whose circumstances remain unchanged is going to lose out at the time when universal credit is introduced.
The Government will top up the benefits of those who would otherwise be entitled to less under the new system.
The details of how exactly this is going to work are still to be established.
A timetable for the introduction of Universal credit is set out in the Department for Work and Pensions (DWP) Business Plan 2011-2015. For information on this see www.disabilityalliance.org/dwpplan2011.htm
The Department for Work and Pensions has set up a useful Welfare Reform Bill resource page. You can view this at http://tinyurl.com/65owodg. This page has links to DWP impact assessments which provide information on UC payments, earnings and capital rules. The DWP have also published a set of UC frequently asked questions at http://tinyurl.com/6dlua2l.
27 January 2012
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