Universal Credit

The system of working-age benefits and tax credits in place before the Welfare Reform Act 2012 is being replaced by Universal Credit. The benefit was due to be phased in over four years between 2013 and 2017, although it is running behind schedule.

In December 2013, the secretary of state for work and pensions Iain Duncan Smith admitted that Universal Credit would not be paid to about 700,000 people until after the planned 2017 deadline. The coalition government describes the main differences between Universal Credit and the welfare system in place before the Act began to take effect as follows:

• Universal Credit will be available to people who are in work and on a low income, as well as to those who are out of work;

• most people will apply online and manage their claim through an online account;

• Universal Credit will be responsive. As people on low incomes move in and out of work, they will get ongoing support, giving people more incentive to work for any period of time that work is available;

• most claimants on low incomes will still be paid Universal Credit when they first start a new job or increase their part-time hours;

• claimants will receive a payment once a month, paid into a bank account in the same way as a monthly salary;

• support with housing costs will go direct to the claimant as part of their monthly payment.

In April 2013, the Department for Work and Pensions (DWP), with HM Revenue and Customs (HMRC) and local authorities, introduced Universal Credit to some claimants within certain areas of the North-West of England (Ashton under Lyne in Tameside, Greater Manchester). But other trials in this so-called Pathfinder stage, due to take place in Wigan, Oldham and Warrington, were delayed.

From October 2013 — April 2014, all new claims for out-of-work support were due to be treated as claims for Universal Credit. No new Jobseeker’s Allowance, Employment and Support Allowance, Income Support and Housing Benefit claims were due be accepted. People moving from out-of-work benefits into work were due to move on to Universal Credit if they were eligible. This is known as natural migration.

From April 2014-late 2015, existing claimants (and their partners and dependents) who will benefit most from the transition were due to be moved on to Universal Credit. This is known as managed migration. New claims and natural migration were due to continue, with no new claims for Tax Credits.

From the end of 2015 to October 2017, transition to the new system was due to be completed under managed migration as the old benefit system is wound down. New claims and natural migration will continue.

However, as set out above, the timetable has slipped and the Labour Party cited figures in the 2013 Autumn Statement showing that only a handful of people would be claiming Universal Credit in 2014 and that the figures for 2015-16 would be about 400,000 compared with initial expectations of 4.5 million.