Universal Credit

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

Universal Credit is the biggest change in the welfare system in a generation and will have a huge impact on housing associations and their tenants.

Influencing the design and implementation of Universal Credit is therefore a priority for the Federation. We continue to:

  • raise concerns with the Department for Work and Pensions and
  • work closely with members in the Pathfinder and live running site areas to monitor the impact of Universal Credit.

 

What is Universal Credit?

Universal Credit aims to:

  • simplify the benefits system by replacing six existing benefits into a single monthly payment
  • increase work incentives for those who are unemployed or working part-time.

This page provides answers to frequently asked questions about Universal Credit and how it differs from Housing Benefit, with links to further information on related concerns and detailed briefings aimed at our housing associations members who may need more in-depth information on the changes. We've also put together a brief overview of the main issues with Universal Credit, as an introduction to the subject,

 

What existing benefits does Universal Credit replace?

Universal Credit will replace six existing benefits:

  • Working Tax Credit
  • Child Tax Credit
  • Housing Benefit
  • Income Support
  • income-based Jobseeker’s Allowance
  • income-related Employment and Support Allowance.

Universal Credit will not include Disability Living Allowance (DLA) or Carer’s Allowance. The Welfare Reform Act replaces DLA with Personal Independence Payments, which will also be excluded from Universal Credit.

How will Universal Credit claims be made?

The intention is that Universal Credit claims will be ‘digital by default’ with the majority of claims being made online.   The Government’s aspiration is that 80% of applications for Universal Credit will be made online by 2017.

Although a telephone helpline is available, this raises the issue of digital inclusion and confidence amongst claimants.

How is Universal Credit calculated?

The Universal Credit award is made up of the following components:

  • The standard allowance
  • An amount for responsibility for children and young persons
  • An amount for housing
  • An amount for ‘other particular needs and circumstances’

 The specific amounts for each will be set out in regulations. [need link here]

For each Universal Credit claimant there is a ‘maximum amount’ which is made up of the different elements outlined above. From this, there will be deductions for earned and unearned income, referred to as tapers and disregards.

How will Universal Credit be paid?

Universal Credit can be awarded to a single person or to a couple jointly – where a couple make a joint claim they will have to decide who receives the single payment.

For most households Universal Credit will be paid in arrears as a single monthly payment, aiming to replicate the experience of most people in work. This will be a change for many people already receiving benefits who are used to budgeting on a fortnightly basis. 

Many current claimants have their housing benefit paid directly to their landlords, whereas under Universal Credit, most tenants will receive the housing element of the new benefit paid into their own bank accounts.  See Direct Payments under Universal Credit for more information about our concerns on this issue. 

There will be certain payment exceptions for different groups of vulnerable people – read more about our work on the definition of vulnerable claimants.

Who will claim Universal Credit?

Universal Credit is a working-age benefit, so will be:

  • available to those who are aged 18 or over, but
  • under the qualifying age for pension credit.

Universal Credit will provide both in and out of work support. Claimants must satisfy certain financial conditions – Universal Credit will not be payable when a claimant’s capital or income is above a certain limit. 

Older people under Universal Credit

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.

16 and 17 year olds under Universal Credit

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.

 

When will Universal Credit be introduced?

Universal Credit is being rolled out in phases, with claimants gradually being transferred from the old system to Universal Credit.

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

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 

June-December 2014 

Wider rollout to all local authorities in the North West, to allow applications from single and couple claimants

November 2014 Digital trial begins
February 2015  Rollout of Universal Credit commences across the country
2016 Migration of existing benefit claimants onto Universal Credit commences
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