Universal Credit

Universal Credit will replace many existing benefits and provide both in and out of work support for working-age claimants.

The Federation is working hard to influencing the detailed design and implementation of Universal Credit. Key issues we are working on include:

Direct payments

The default position under Universal Credit is that claimants will receive any support for their housing costs directly, rather than having benefit paid direct to their landlord. Details of the arrears trigger have now been announced.

Support for claimants

We are a member of DWP's support and exceptions working group and are working to ensure that the circumstances and needs of social tenants are understood and reflected in the detailed design of Universal Credit.

Service charges

The Universal Credit regulations will define eligible service charges, with everything else ineligible – reversing the current position of listing ineligible services. The intention is that broadly speaking those service charges currently considered eligible under Housing Benefit will remain eligible under Universal Credit. We are working to ensure that the detail of the proposals reflects this intention.

Supported housing

DWP have now confirmed that additional housing costs for ‘exempt accommodation’, will be managed outside Universal Credit when it is introduced in 2013.

Universal Credit FAQ

Find out about how Universal Credit will work.

Which benefits will be included?

The Universal Credit will replace Working Tax Credit, Child Tax Credit, Housing Benefit, Income Support, income-based Jobseeker’s Allowance and income-related Employment and Support Allowance.

It will not include Disability Living Allowance (DLA) or Carer’s Allowance. Measures in the Welfare Reform Act replace DLA with Personal Independence Payments, which will also be excluded from the Credit.

Who can claim Universal Credit?

Universal Credit is a working-age benefit, available to those who are aged 18 or over, but under the qualifying age for pension credit. It can be awarded to a single person or to a couple jointly.

Claimants must satisfy certain financial conditions, Universal Credit will not be payable a claimant’s capital or income is above a certain limit. The capital limit will be set in regulations, but is likely to be £16,000.

What about older people?

Pension credit will remain for those over the qualifying age. In the future, housing benefit will be rolled into pension credit, this is due to start in October 2014.

After Universal Credit has been introduced, if one member of a couple is over and one under the qualifying age for pension credit then the couple will be treated as working age. This means they would be expected to claim Universal Credit. Those already claiming pension credit will be protected.

What about 16 and 17 year olds?

There are five categories of young people aged 16 and 17 who are to be able to claim Universal Credit in their own right:

  • those with dependent children - lone parents or couples
  • sick or disabled young people who have satisfied the Work Capability Assessment or are waiting to be assessed with medical evidence
  • those who are caring for a severely disabled person
  • young women who are pregnant between 11 weeks before and 15 weeks after the expected date of confinement
  • young people who are without parental support

There is no entitlement to Universal Credit for young people who are in local authority care. Young people in care, who have dependent children, or a disability, are allowed to claim Universal Credit but are not entitled to the housing element.

How will it be paid?

For most households Universal Credit will be paid in arrears as a single monthly payment. Where a couple make a joint claim they will have to decide who receives the single payment.

Most working-age tenants will not be able to choose to have any of their benefit paid direct to their landlord and will start to personally receive the housing element of the new Universal Credit as part of their monthly payment.

Will there be any exceptions to this?

Yes. There will be certain payment exceptions for different groups of vulnerable people. These include split payments within a household, more frequent payments and retaining direct payments to landlords. The Federation is involved with the DWP’s support and exceptions working group, looking at which types of recipients of Universal Credit should be able to retain direct payments to landlords. Welfare Reform Minister Lord Freud has accepted that a proportion of HB recipients need this because of ‘vulnerability’. We have argued that any list of vulnerability factors should consider rent arrears, debt problems, and type of accommodation (i.e. supported and temporary). Decisions are likely to be taken by ministers before the end of 2012.

We commissioned Policis to produce a report to identify those who are likely to struggle with the move to Universal Credit.

When will people be transferred to Universal Credit?

The Department of Work and Pensions is planning to introduce Universal Credut in phases, beginning in April 2013 in the Greater Manchester Pathfinder.

Initially, Universal Credit will replace new claims from single jobseekers of working age in certain defined postcode areas.

During Phase 2, from October 2013 to March 2014, they plan to extend the service to include jobseekers with children, couples and owner-occupiers, gradually expanding the service to locations across Great Britain.

The migration of existing claimants from the old system to the new is planned to be completed by the end of 2017.

Date Phase Implementation Activity
April 2013 Phase 1 Pathfinder Universal Credit starts in the four Pathfinder authorities with single jobseekers: Tameside, Warrington, Oldham and Wigan
October 2013 to March 2014 Phase 2 Staged

Extended coverage of Universal Credit rolled out, staged across Great Britain. Roll-out will expand next to six hub jobcentres - Hammersmith, Rugby, Inverness, Harrogate, Bath and Shotton - see the latest  timetable for this.

April 2014 to 2017 Phase 3+ General coverage Universal Credit national implementation due to be completed by end of 2017

Read the latest timetable announcement here.

Will Universal Credit be piloted?

Yes, several aspects of Universal Credit are being tested before it is rolled out nationally from October 2013.

Direct payment demonstration projects

Six demonstration projects are running until June 2013 to test how claimants can manage housing benefit monthly payments ahead of the introduction of Universal Credit. The projects will look at the appropriate level of safeguards needed to help secure landlord income streams if tenants fall behind on their rent.

Universal Credit early roll out

Universal Credit went live in Tameside in April 2013 and in Oldham, Wigan and Warrington from July 2013. The early roll out will test the new benefit payment system with local authorities, employers and claimants in a live environment before Universal Credit is introduced across the country in October 2013.

Universal Credit local authority pilots

The local authority pilots will start in autumn 2012 and will focus on delivering the face to face support some people may need to make claims for Universal Credit, including online support, help with budgeting and job searches, reducing fraud and error, and reducing homelessness.

How will rent payments work within Universal Credit?

Universal Credit will be a single monthly payment. As long as a claimant doesn’t have a change of circumstance, the amount of Universal Credit received to cover housing costs will be the same each month. This means that where rental agreements include rent free periods the Universal Credit payment will be based on the total yearly rent divided by 12.

How will non dependents be treated under Universal Credit?

Currently there are a range of non dependent deductions from housing benefit depending on the economic status of the non dependent. This will be changed to a single flat rate deduction, likely to be around £65 per month. There will continue to be no non dependent deduction where either the claimant or the non dependent receives Attendance Allowance or higher rates of DLA. There will be no non dependent deduction where the non dependent receives pension credit, is a lone parent with a child under 5, is a carer, a prisoner or is under 21.

The simplification of the non dependent system will result in some people being better off and some worse off than under the system for housing benefit. Under housing benefit there is no non dependent deduction for people on JSA who are under 25. People aged 21 - 24 will see a deduction under Universal Credit.