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Benefits Blog

by Tombenefits

news and thoughts from the world of welfare rights
27 October 2017 at 19:02

UC 2: Why UC and How it differs?

A second part of my introduction to Universal Credit (UC) looking at why the reform and how UC looks very different to other benefits

Welcome to Part 2 of this Introduction to Universal Credit where I will look at the Why is UC  happening? And this in turn helps helps explain the rather different How UC works?

In Part 1 – available here - I looked at What is UC?, and Where is UC happening? Along with When does UC come to my area?

And that straightforward introduction is already complicated by the long story of UC since it began in April 2013, it’s two different types and the complications of switching over too early caused by UC not honouring the usual precedent of protecting people who would otherwise lose out at the point of switching from an old benefit to a new.

And that means that following bad DWP advice that you have to switch when you don’t could cost you substantially. So please check out the consequences of a switch and whether you actually need to switch, or can wait out until a more honest process starts from July 2019.

This time then I will look at Why UC? as the logic behind Universal Credit behind it may also help explain How UC works? And the very different look and feel to other benefits.

 

5. Why is UC happening?

5.1 Partly a re-organisation of these benefits

The key point is that UC is not just an administrative – and uncontroversial - merger of what the Department for Work and Pensions have taken to calling the “legacy benefits”.

So, this not like the last “biggest change since Beveridge” way back in 1988 that gave rise to a simpler, rationalised Income Support, unified Housing Benefit and a changed Family Credit and Disability Working Allowance.

Nor is UC just a “back to the future” return to 1988 although there are elements of that in:

  - bringing Income Support, back together after it has since split into 4 separate benefits: Income-based Jobseeker’s Allowance (for the unemployed), Income-related ESA, (for the unwell) and Pension Credit (for the over 60s and rising) and a remaining IS for mainly carers and lone parents)

  - bringing amounts for children back from tax credits

  - bringing “in work support” back into benefits rather than aligned to the tax system in Working Tax Credit

  - keeping a unified Housing Benefit but bringing it into the DWP rather than local councils

Doing all of that and doing it well might be relatively uncontroversial and saves a lot of switching about between benefits as circumstances change and creates the possibility of removing some of the odd effects and seriously tackling the disincentives and barriers for moving into work.

I should add that while there is a lot of unifying into one – ahem :-) - seamless, simpler benefit going on, the re-unification and going further issue does not extend to Pension Credit. That part of the old Income Support will stay quite separate.

5.2 A change with a mission and agenda 

However, a key to understanding UC, is that only some of the How UC works? is due to searching for the holy grail of a simpler universal way of doing benefits that might works for all types of claimants.

The other part of it is that it comes from a definite vision of a new approach and relationship with claimants, rooted in a particular right of centre political view of the causes of poverty and the best ways of tackling it.

Now you may totally agree with the UC philosophy or have your doubts, but UC definitely has its own vision thing and a lot of “blue sky thinking behind it. And that’s why the Government may appear so reluctant in recent weeks to make what seem small common-sense changes to improve the system.

UC comes then with a view of what’s wrong with the old system and a definite sense of missionary zeal behind it. It originates in a personal commitment by former Conservative Party leader Iain Duncan-Smith that “something must be done” after a visit to the large Easterhouse estate in Glasgow, and the work that was then done by the think tank that he chairs, the Centre for Social Justice.

This in turn came up with detailed proposals for UC in a report in 2009 entitled Dynamic Benefits: Towards Welfare that Works – available here.

And the upshot of that is a very different looking benefit and experience when you start a UC claim and keep one going. Some will feel either familiar if you have met the old system; others very different. You might like some changes,  others may leave a bit more bewitched, bothered and bewildered – but not necessarily in a good way.

And while UC as is may be a far cry from the original blueprint, the CSJ remains broadly supportive, though some important suggestions for change as you can see in a recent report here.

For contrasting views see other submissions from:Citizens Advice here

5.3 So, what does UC think is wrong with the legacy benefits system?

- it’s too complicated with too many separate benefits and bits that can clash with each other, which can really get in the way of progress into work

- a serious "poverty trap" they create a massive disincentive effect, precisely at the point where economists say a cash incentive would have the biggest effect. People are facing effective tax rates of 100% or 85% as they start moving into work. It takes a while before many will see this shrink to 41% or the usual 31% tax take for basic rate taxpayers.

- switching into work can feel a big step and a risky one, especially when it isn’t clear how it pays – or not in the long term.

- Re-allocating funds - there need to be a switch between groups – some are seen as doing too well out of benefits while others are seen as deserving of more. Bad news for many people affected by cancer :-(

- too much cost and unneccessary support : the old way of processing benefits offers a lowest common denominator of support for everyone, not needed by most and standing in the way of independence  Better to get a less involved – and a cheaper – general system with more focussed and flexible support where needed. An emphasis then on “claimant responsibility”

  - but more supervision on seeking work: one area for increased support / control for all is around better tailored support to help people find work or keep in touch with work if it isn’t a possibility just now.

  - a behavioural change amongst claimants  is said to be needed: more intensive supervision and support, some initially very strong carrots of much better and clearer work incentives and potentially more generous benefit and some pointy sticks of sanctions were needed to secure behavioural change.

So, Universal credit UC) would aim to offer something different, that some call a sort of tough love apprroach.  The plans would involve more generous amounts – especially in taking those first steps into work – and would actually cost more to run, But with that greater support and funding comes a tougher obligation to take advantage of that support and take greater responsibility.

5.4 The main objectives of UC then are:

  - Simplicity – no need to switch benefits as things changed, no odd hours rules or barriers between out of work and in work benefits, a common simpler framework for all claimants

  - incentives into Work - clear carrots and work incentives with a 55% all-inclusive maximum taper as you earned so as make work pay and more active support to get there. But also, an emphasis on claimant responsibility and commitment, backed up by clear sanctions

   - Reduce Poverty – directly by a more generous benefit with much more “winners” than losers” on switching over. And an indirect effect by being better at getting people into work. Initial DWP estimates were first downgraded and now they just won't say - following cuts .

Long term that original extra cost – some £4 billion – would be recouped from greater success in getting people into work so there would be lower numbers on Universal Credit and savings to the Treasury longer term.

However, the Treasury were keener on savings now and UC has lost a lot of the incentives aspect of the scheme and carrots have withered rather. That does rather test the credibility of the offer and UC as a genuine reform, when things have been set up to deliver the April 2016 cut to support for people in low paid work, but in a different way.

Cuts have then muddled UC’ message, introduced added complications and become a vehicle for cuts which was never intended.

But leaving aside the fact that UC may have less positive to offer than intended, the brave new world and new thinking, slightly removed from experiences learned from the old “legacy benefits” does in part explain some of the very different key features of Universal Credit and its reluctance to change from the programme in recent weeks.

 

6. How UC works? What differences would I notice if I claimed Universal Credit?

People affected by cancer know all about change and adaption :-)  But any change can take getting used to, even if on looking back you think some aspects work better for you and some worse. For those claiming for the first time, it’s less change from what you are used to, so much as needing to get a sense of the key features of how UC works, even when there are no hiccups or problems with your experience of it.

These key features include:

  - Online claims: claiming and maintaining your claim via an online account – eventually all contact could be online, documents scanned and uploaded. So, sorting out a UC claim can still involve a lot of hanging on the telephone as you call the UC Service Centre ?

  - a monthly benefit paid in arrears, so no payment until week 5 or 6 of your claim. However, a 50% advance is available as a loan until your UC starts up and these have been made a little easier to access and become more publicised recently. The idea is to make it feel more like starting a job and working a month in hand.

  - monthly payments – to make it feel more like work and encourage monthly budgeting skills. Other payment intervals are available on request and will be the norm in Scotland and N. Ireland. So that’s why it is hard for UC to simply make the first payment earlier, because they want to pay you at the end of each monthly assessment period

  - monthly assessment periods – this is to simplify when any change in circumstance takes effect or to be clearer about the when income has an effect. So, if you receive money as a self-employed person, become unwell or a carer, have a child then the change will apply for the whole month. Report the change in time within the assessment period – and any increase gets backdated. Report late and it will only apply in the next period. If it’s a change that reduces your UC, there is no benefit in delaying as you will rack up overpayments and money will be recovered, and with possibly a civil penalty on top.

  - rent included in your main monthly payment, unless you really can’t manage this or get into arrears – again different in Scotland and N. Ireland where the choice is yours.

  - a Claimant Commitment must be accepted and some initial contact with UC work coaches in most cases to do this. But the requirements should be very limited for those with a cancer diagnosis or for all, this shouldn’t be too onerous for the unwell or carers, but there have been some problems

  - a greater emphasis on “claimant responsibility” and so less general staff or support in the claims processes and it’s much more down to you to make the claim, report changes, manage your online account and do whatever is required.

  - Any additional support needed is dealt with outside of the main benefit through a slightly more slowly appearing system called Universal Support. Concessions around more frequent payments or paying rent directly to landlords will be on a much more temporary basis with the expectation that you can get with the main programme.

  - a single payment per household – not so good when money is a tricky issue in a relationship. And despite the research that shows money for children reaches them most effectively when paid separately to the main person with care of the child.

  - a single agency dealing with all your income related support – much less hassle if all goes well, but a touch of “all eggs in one basket” if things go wrong …

  - a different set of sums from old benefits and tax credits – Key differenced for people affected by cancer include a higher equivalent to ESA Support component no additional disability amounts, some changes for carers and a halving of amounts for most children with disabilities

  - much more discretion a lot more down will be to discretion and judgement calls by UC work coaches – if not as much as some imagine :-) Some find work coaches really supportive, flexible and helpful. Others experience them as pushing to tick boxes at the wrong time for them and with a more jaundiced, fixed and judgemental eye.

- a different approach to health and disability claims – although the protections that go with cancer will see you through much of it.

I will explain these main features in more detail in future blogs. Both to clarify what is meant to happen and then some of the common problems that seem to be arising at the moment and what to do should you strike unlucky.

Reviews from people on UC are mixed: Many find online more convenient, their claims go through without fuss, and their work coaches flexible and supportive. Others are feeling lost, confused and a little overwhelmed by the UC’s demands, and conflicting advice they get when ringing up the UC Helpline to try and get things sorted.

 

So, to sum up.

In Part One - available here:

Universal Credit (UC) will eventually affect 7.5 million claimants and 12 million households in the UK – anyone who would have claimed one of the working age “legacy benefits” under the old system

So that’s the six benefits of: Income Support, Income-based JSA, Income-related ESA, Working Tax Credit, Child Tax Credit and Housing Benefit. These will eventually disappear in April 2022. But they will be around for a long time yet.

UC does not replace other means tested benefits such as  Pension Credit or Council Tax Support. Nor does it take in any of the non-means tested benefits such as PIP, Attendance Allowance, DLA, Contributory ESA or Carers Allowance.

Although UC first saw the light of day in April 2013 and was present in every part of England, Scotland and Wales by March 2016, this has mainly been been restricted to new claims for the simplest to handle claims for what would have been JSA, so the impact has been limited.

It is only now that the transition from Gateway UC to Full Service UC is getting up to full speed, with about 5% of areas switching to Full Service each month until September 2018. See the timetable here

And UC also makes its first appearance in Northern Ireland this month – if you live over the water, your first experience of UC will be Full Service UC and the timetable is here.

Just because your area goes Full Service does not mean you will need to start thinking about a switch to UC straightaway. Rather, this “transition” means that:

  - new claims will be for UC rather than the 6 legacy benefits; and
  - if you already get a legacy benefit you stay just as you are for a while, but there will be more potential for you to switch to UC early if there is a change of circumstances.

But thats a big if . So, if in doubt as to what a switch means for you or whether you do actually need to switch, just because the DWP says so, please get advice or message me.

Here, in Part 2

UC is more than just a restructuring of the benefits, but also has strong personal and political vision behind it and very intentionally new and different design to it. So, in many ways it is meant to feel very different to other benefits. But it also explains why the initial response to concern is to stick with it while offering to continue a “test and learn” approach.

That does put a lot of pressure on the DWP's ability to " test and learn" and the record is not great so far. It is not just twesks but signs of a need for more fundamental fixes and rethinks.

The hope then will be that by the time you come across UC things will be be working more smoothly and UC will have had some tweaks and more significant changes, to make it less political and dogmatic and a little more practical.

In future blogs, I will look a bit more closely at

  - how you claim and the claimant journey

  - how the simpler sums work

  - specific issues around health, disability and caring including in the sums

  - changes when moving back into work

In the meantime, please do post any general comments, queries, shared experiences of UC – good and bad – by joining the Conversation here.

And if in the meantime you have any individual concerns or queries please feel free to message me.

While UC has its problems, these hopefully will be fixed long before it comes your way.  Please then,  don't have UC nightmares and if you have any worries or issues with UC, please message me

Best wishes,

Tom



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