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Alan Sullivan, Managing Consultant, Department for Work and Pensions 07770 543364 Email: alan.sullivan@dwp.gsi.gov.uk

Introduction of Universal Credit: A Progress Report

IRRV Severnside Association

6 December 2011

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Why change

• managing rising costs

• delivering fairness

• increasing employment

This means transforming what we do and how we do it

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Housing Benefit has already changed

From April 2011:

• Local Housing Allowance (LHA) reform (removal of 5 bed rate and £15 excess, caps)

• size criteria: additional room for a non-resident carer where a disabled person has need for overnight care

• staged increase in non-dependant deductions

• LHA set at the 30th percentile of rents in each Broad Rental Market Area, rather than the median

From January 2012:

• LHA – extend shared accommodation rate to those under 35

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…and more reform impacts for local authorities from 2013

Housing Benefit– LHA rates linked to CPI– social rented restrictions linked to size and structure

Fraud– single Fraud Investigation Service

other benefits– benefit cap linked to average earnings– localised support for Council Tax led by DCLG– introducing locally-based welfare assistance– ….and of course introducing Universal Credit

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Universal credit

• the biggest change to the welfare system for 70 years

• a cultural change in attitudes to work• enabled by new technology• redistribution to lower income

households• positive poverty impacts• administratively simple: savings over

time

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Personal Independence Payment

Universal Credit

How are we simplifying the system?

Child Benefit, Carer’s Allowance (will remain)

Income related JSAIncome related ESAIncome Support (including SMI)Working Tax CreditsChild Tax CreditsHousing Benefit

Disability Living allowance

Current system New system

Contributory JSA and ESA (still considering how these will work)

Council Tax Support (still considering how this will work)

… will include support for housing and children

Pension credit

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A simpler system with clear work incentives

200

100

0100

£100

£500

£400

£300

£200

£100 £300£200

£0

£400 £500

Universal Credit payment

Total in-pocket income

Universal Credit: lone parent with two children

£600 £700

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Universal Credit and housing

Housing Benefit will be:

• integrated into Universal Credit, over time

• available to pensioners through Pension Credit

• currently considering policy for eligible service charges and non

dependants

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Universal Credit and housing

Direct payments in Universal Credit

• responsibility prepares people for the world of work:– Managing your rent or mortgage is a social responsibility– Progress has already been made through the LHA

• private rented sector tenants will generally be paid as now

• social-sector landlords need stable incomes:– Welfare Reform Bill pledges appropriate protection– Demonstration projects to commence June 2012

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Direct payments - demonstration projects

•On 14th September, Lord Freud announced six small-scale demonstration projects to test key elements of social sector housing support under Universal Credit while protecting social landlords’ financial position. These will include:

– direct payments to tenants being the default; – adopting the Universal Credit payment frequency (likely to be 4

weekly/monthly payments in arrears); – financial support mechanisms for claimants and safeguards to pay the

landlord directly where necessary, to be defined during the project. Safeguards generally to be rules based and manually operated, simulating the approach within Universal Credit.

•Projects to run in about six local authority areas from June 2012 to June 2013, with a six-month lead in starting in January 2012. We will also commission an independent evaluation of the projects.

•Sites have been selected and we will be announcing the project areas very shortly.

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Delivering Universal Credit: what do we know?

• digital by default

• for 2013, Universal Credit will be delivered using existing resources

• joint working between DWP, local authorities and HMRC

• Jobcentres are expected to be the primary channel for local, face-to-face support

• working with local authorities to define and agree their role in face-to-face delivery

• contact centres and support centres will be provided from a subset of the best DWP and HMRC sites

• a strategic long term solution to be developed

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IT and data sharing with local authorities

• ATLAS project is successfully delivering notifications of tax credit changes

• Phase 2 of ATLAS, delivering details of other benefit changes, was

implemented in November 2011 for early adopter sites

• looking further ahead we are considering how the ATLAS infrastructure can be used to:

– streamline the provisions of ETDs– help with the transition of housing costs into Universal Credit and,

subsequently, Pension Credit– help with the delivery of the overall benefit cap– support local authorities in running local Council Tax support

schemes

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Changes to Pension Credit

• help with eligible rent through housing credit within Pension Credit

• help with dependent children: additional amount will be included in the Guarantee Credit element of Pension Credit

• introduced the year after Universal Credit

• housing credit will broadly replicate existing Housing Benefit rules so that pensioners should continue to receive the same support as now

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Caseload migration: principles

• Universal Credit will launch in October 2013

• all new claims to legacy benefits phased out by April 2014

• new claims to Tax Credits continue until April 2014

• a significant proportion of the existing load migrated by April 2015

• all 12 million cases migrated by Oct 2017

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Migration: what’s the plan?

• Phase 1 October 2013 and April 2014: 500,000 new claimants will receive Universal Credit in place of one of the old working age benefits or credits. At the same time a further 500,000 existing claimants (and their partners and dependants) will also move on to Universal Credit when their circumstances change significantly, such as when they find work or when a child is born.

• Phase 2 April 2014 to around end of 2015: will give priority to households who will benefit most from the transition, such as those Working Tax Credit claimants who currently work a small number of hours a week but could work more hours with the support that Universal Credit brings. Overall 3.5 million existing claimants (and their partners and dependents) will be transferred onto Universal Credit during this second phase.

• Phase 3 end 2015 to end 2017: will see around 3 million households being transferred to Universal Credit by local authority boundary. This phase will have the flexibility to respond to the circumstances of particular local authorities as they change and will focus on safeguarding financial support, such as Housing Benefit payments, to claimants as the old benefit system winds down.

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How will people migrate?

• new claims – where legacy benefits are closed to new entrants

• natural migration – where a change of circumstance results in new award of Universal Credit

• managed migration – where DWP initiates the transfer of an entire household from legacy benefits to one Universal Credit entitlement

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Working with local authorities to plan for transition to Universal Credit

• collaborative design, working with all stakeholders

• policy certainty soon: Bill progressing through the Lords

• the Business Change Planning Framework sets out the high level business changes required by all delivery organisations

• transition working group contributing to design and transition plans

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Maintaining delivery and building resilience for transition

• continuing publication of key Housing Benefit and Council Tax Benefit information

• Performance Development Team support for performance improvement:

– performance is low in comparison to other local authorities – performance falls in relation to its own previous performance– lack of performance data provided– we are asked to by a local authority to provide support

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Risk Based Verification (RBV)

• On a voluntary basis from April 2012

 • Designed to help prevent fraud and error by shifting resource from

low risk to high risk cases

 • Brings about major efficiencies in terms of reduced paper handling,

storage, reduced processing times etc

 • HB/CTB Circular S11/2011

 • Support available from PDT.

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Here to help

The Performance Development Team offers support on a wide range of issues including:

– reviewing processes to reduce handoffs and duplication– maximising efficiency through introducing shared services– sharing good practices within groups– working with neighbouring local authorities to build resilience and

share resources– reducing outstanding overpayments in the run-up to Universal

Credit

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Conclusion

• radical changes to the benefit system

• move towards Universal Credit over time, with implications for

delivery of housing services and costs

• work in progress on delivery model

• we will need to do things differently: on-line claims and real-time

processing

• …and so will our citizens

• Universal Credit in context of broader welfare transformation

• Welfare Reform alongside some major work to configure broader services especially localised Council Tax support and new fraud services

• Universal Credit - some key decisions are needed to help you plan

Questions