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UC
What is Universal Credit?
1 March 2012
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Content
Introduction
What is Universal Credit?
Universal Credit Policy Intent
Gateway & Touchpoints
Communications approach
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Aim
• give a broad overview of Universal Credit at this early stage of development
• provide an opportunity for you to raise questions and concerns and suggest ways we can overcome concerns
The aim of this presentation is to:
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Scale of the Change
“…the most significant change to the welfare
system since Beveridge in 1940s”
Iain Duncan Smith, DWP Secretary of State
“…we need to break inter-generational worklessness, create new role models in families and communities,
and break the cycle of benefit dependency. ”
Nelson McCausland, DSD
Minister
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ObjectivesDWP White Paper Universal Credit: Welfare that Works –
published November 2010 – builds on work of Centre for
Social Justice;
“Current system is failing and has perverse incentives”;
Universal Credit proposes to help:• Ensure that work always pays• Protect the most vulnerable• Improve levels of benefit uptake• Reduce fraud and error in the system• Streamline the system• Achieve administrative savings
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Replaced by Universal Credit
Income based JSA
Income related ESA
Income Support
Child Tax Credits
Working Tax Credits
Housing Benefit
SF (Budgeting loan elements)
What’s in / What’s outNot covered by Universal Credit
DLA / PIP
Contributory Benefits (although earnings rules aligned)
Child Benefit
Carers Allowance
SF Crisis Loans & CCGs
HB (Rates) (Council Tax Benefit equivalent)
Passported Benefits
Claims made for households
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Universal Credit - Overview
Universal Credit
JSA ESA IS HB TCs
Customer
Programme
Self serves onlineOperation of the taper
Finds work
BenefitsIncreased income
Employment
Poverty
Worklessness over generations
Replacement of welfare benefits
Legislation
Automation
Advice and assistance
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NI Programme Structure
Legislation
Policy Impacts
Analysis
Business Change
Communications & Stakeholder Engagement
Programme Management
Finance Directorate
HR Planning
Customer & Service Design
IT
Delivery ICT Policy
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Nov 13Apr 13 Oct 14 Oct 15 Oct 16 Oct 17
DWPPilot
New claims to JSA, ESA, IS, and HB will be phased out from Oct 13 Management of caseload and payments will continue
All new claims to Tax Credit cease in April 14. Renewals, caseload management and payments continue.
Working age legacy benefits
Universal Credit caseload builds …
Timeline – UC Implementation
Current assumption – full transition over 4 years
Housing Costs / Child costs for pensioners - to Pension CreditPension age benefits
Mar 11Jan 12Feb 11
Westminster Welfare Reform Bill
NI Welfare Reform Bill
Jun12
NI UCP Start- Up
ESA & IS
JSA
HB
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Universal Credit
Policy Intent
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What is Universal Credit?
A single allowance – which replaces income-related social security benefits, housing benefit and working and children’s tax credit;
A single allowance – which can be paid whether you are in or out of work;
Focused on household earnings – through credit payment reflecting circumstances (including additional elements for disability, caring duties, housing costs and children);
Tapering of the allowances earnings rise – Universal Credit withdrawn at a constant rate of 65p in the pound of net earnings
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Constant Taper
Comparison of Income Under UC and Current System
0
50
100
150
200
250
300
0 5 10 15 20 25 30 35 40 45 50
Hours Worked
Ne
t In
co
me
(£
)
UC net income
Current net income
UC benefit
Current benefit
Single customer, no children, National Minimum Wage, Renting (£95 rent)
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Constant Taper
• Taper – rate at which benefit is
reduced to take account of
earnings
• Currently different tapers for
social security benefits & Tax Credits
• Universal Credit – single withdrawal rate (Marginal Deduction Rate) of 65% applied to earnings net of tax and National Insurance
NB: Taper rate (MDR) could change nearer the launch date
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Universal Credit – Key Features• Replaces income-related social security benefits, housing
benefit and working and children’s tax credits;
• Single household payment instead of mixture of weekly, fortnightly and monthly payments;
• Personal responsibility for bills instead of direct payments by state
• Self service and digital access;
• Conditionality and labour market support
• Childcare support; and
• Gradual reduction in benefit as earnings increase.
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PolicyFour Conditionality Groups under Universal Credit:
1. Full Conditionality
2. Work Preparation
3. Keeping in Touch with the Labour Market
4. No Conditionality
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Full Conditionality
Full Conditionality
•Default Option
•Be immediately available for work
•Claimant commitment
Exceptions for immediate availability e.g.:
•Those who need to make childcare arrangements;•Those who need to serve a period of notice.
Personalised Conditionality Requirements
Permitted customers can place limitations on work they must search for in certain circumstances e.g.:•Those with a good work history•Those with a health condition
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Work Preparation
Customers in this group are:
• Disabled or have a current health condition which means they have limited capability for work at the current time
• Expected to take reasonable steps to prepare for work
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Keeping in Touch with the Labour Market
Customers in this group are:
• Lone parents or lead carers
in a couple with a child over
one but under five
• Expected to attend periodic interviews to discuss their plans for returning to the labour market
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No ConditionalityCustomers in this group:• Are disabled or have a serious health condition which
prevents them working and preparing for work; and/or
• Are a lone parent or lead carer
in a couple with a child under one;
and/or
• Have intensive and regular caring responsibilities; and/or
• Earning above the relevant threshold
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Universal Credit Sanctions – Key Aspects
Sanction Applicable to: 1st failure 2nd failure 3rd failure
Higher Level e.g. failure to take up a job offer
Claimants subject to all work-related requirements
3 months 6 months 3 years
Medium Level
e.g. failure to undertake all reasonable action to obtain work
Claimants subject to all work-related requirements
4 weeks 3 months
Lower Level
e.g. failure to undertake particular, specified work
preparation action, failure to participate in a work-focused
interview
Claimants subject to all work-related requirements
Claimants subject to work preparation and work-focused
interview requirements
Open ended until re-engagement followed by
1 week 2 week 4 weeks
Lowest Level
Failure to participate in a work-focused interview
Claimants subject to work-focused interview requirements only
Open ended until re-engagement
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Welfare Reform Bill Progress
• Introduced House of
Commons: 16th Feb
2011;
• Introduced House of Lords: 16th June 2011;
• Expected to complete Westminster Parliamentary
process- end February 2012;
• Royal Assent GB Bill estimated by March 2012.
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Northern Ireland Timeline
• Minister has yet to
decide on the policy
proposals;
• Introduce to NI Assembly after Westminster Bill receives Royal Assent – estimated March 2012;
• Accelerated or normal passage – still to be decided.
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Universal Credit Gateway and Touchpoints
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How the system will work?
Payment of net earnings Universal Credit Payment by BACS
Makes a claims and Provides evidence
Data on maximum Tax Tax Earnings
Entitlement rules revenue
Earnings data feed
Money Flow Data Flow
Customer
HMRC Sets tax rules and collects revenue
Delivery body Assesses the claim
and determines entitlement
Employer Deducts tax, pays wages
and provides earnings details to HMRC
Payment System applies taper and pays the correct
amount
Real Time Information system (RTI) – Data & Money flows
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Universal Credit Customer Gateway
I need help to make a new claim. I telephone UC number, call into a
front line service or seek help from a Customer Representative Group /my appointee. Work focused Interview is
arranged if applicable.If application completed go to 4.
If application not completed go to 3b.
RISK DRIVEN GATEWAY INTERVENTION
UC may contact me to verify some details on my
application. If details confirmed go to step 6.
If I have to provide supporting evidence go
to 5a.
I find out about Universal Credit through media
communications, frontline services, hospital, Customer
Representative Group , family or friends
I am unable to make a claim online or by phone. Someone calls with me and takes my UC claim at my home. Application completed
go to step 4.
If application not completed UC to consider contingency to allow advancement to step 4
I become sick, unemployed,
responsible for a child or young
person*, need to supplement my income, or my
household changes**
1
2
F2F
Unemployed or working
and earning under
conditionality threshold
Employed + earning
over conditionality
threshold
F2F
My circumstances, income or capital
mean I am not entitled to UC.
I have not provided supporting evidence requested at step 5 and application has been disallowed – I
may ask for a reconsideration of, or appeal this decision.
I try a claim online.If application completed go to step 4.If unable to complete online go to step 3a
3b
DATA GATHER
Basic customer details, family, finances, health, medical evidence, housing.I have made an application to UC and agreed my initial responsibilities and await next steps at 4a, 5 or 6
5
Supporting evidence requested at step 5 confirms
my circumstances are correct. Go to step 6. Supporting evidence
provided means changes to my application are required
go to step 5b. No evidence provided or
supporting evidence confirms no entitlement go to step
4a.
F2F
I agree to the changes as specified in 5a and proceed to 4a or 6.
I disagree with changes specified in 5a and have to provide further supporting evidence.
I provide further evidence. Outcome will either be to go to step 4a or 6. I do not provide further evidence proceed to step 4a or 6.
* Birth of new child, adoption, foster carer or become a guardian
** Joint to single household, single to Joint household, new household or Joint claim where both customers need to complete online claim.
I have made a successful claim to UC and continue my journey as Unemployed, Sick or Employed
Sick4
4a
5a
5b
3a
3
6
Draft - Process still in development
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Universal Credit Customer TouchpointsUnemployed customer or customer earning under conditionality thresholdUC UC
I receive my first payment. I may
receive budgetary management support and
information on passport benefits.
I receive notification/e-mail to prompt
me to view confirmation of my UC award
online.
I attend my Work focused
Interview bringing with me
any requested information and agree relevant responsibilities
(Claimant Commitment).
I receive an e-mail reminder about
my Work focused Interview 2 days
prior to my interview.
If I make my claim online I may receive a phone call to book a Work focused Interview which I must attend.
I move into work or increase my earnings so that I am now earning
above the conditionality threshold. I may still be
entitled to UC.
I continue to “sign on” and satisfy my conditionality and the conditions of
my Claimant Commitment (products still
being developed).
I move into work or remain in work earning below the
conditionality threshold and still
receive UC.
I ask for reconsideration/
appeal against my Failed To
Attend/Failed To Participate decision.1 4 6 7
13
10
I fail to attend/participate in
Work focused Interview or satisfy my Claimant Commitment. My UC
payment is sanctioned as appropriate.
I no longer have to “sign on” or
have any mandatory UC conditionality.
I continue to “sign on”. I may have new conditionality and Claimant Commitment until my circumstances change to where I am earning over the
conditionality threshold.
11
14 15 16
F2F
F2F
Conditionality threshold Claimants earning below this threshold could face full or some work-related conditionality, for as long as they continue to receive Universal Credit. At present this is set as equivalent to 35 hours at minimum wage.
I have completed my
claim. I am either
unemployed or working
and earning below the
conditionality threshold.
I do not attend my Work focused Interview. I will
not be paid UC until I attend my Work focused Interview . Go to point 2
if Work focused Interview reorganised.
3
I fail to agree my Claimant
Commitment. I will not be
paid UC until I do so.
5
8
I move into work or increase my earnings so that I am earning above conditionality threshold
and also am now not entitled to any UC. My UC
claim closes.
9
2
I do not satisfy conditionality requirements. My UC may be
sanctioned (work on sanctions still ongoing).
12
Draft - Process still in development
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Communications Approach
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Communication Objectives
Immediate
To ensure there is a consistent
level of understanding of
Universal Credit, the rational for
the change and how it will work.
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Communication Objectives
Medium to long term
Ensure customers transferring to Universal Credit understand how and when the change will affect them;
Encourage customers and employers to contact us through the right channel and encourage the use of online channels; and
Encourage customers and employers to give us the right information, at the right time.
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Communication Objectives
Longer term
Demonstrate the greater incentive to take up and increase work that Universal Credit will create;
Encourage people who are entitled to Universal Credit to claim it; and
Reduce both staff and customer fraud and error by providing appropriate and useful information.
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Approach
Communications to existing customers
Staff updates
Media coverage
Stakeholder Events
Online information – NI DIrect
Communications Approach
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Contact us
Universal.credit@dsdni.gov.uk
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