Universal CreditThe Shape of Things to Come

Angela ToalWelfare rights worker

CPAG in Scotland

The Case for Change

• Poor work incentives– Benefits mean going

back to work doesn’t pay

• Complex system– For claimants– To administer

What is Universal Credit

• A single means-tested benefit• For working age people• Paid in work or out of work• Withdrawn at constant rate

as earnings rise• Support for adults and

children• Support for rent and

mortgages

Who Can Claim

Depends on• Your age• Your residence in GB• Your means• Accepting a

‘claimant commitment’

Lone parents

Sick or disabled people

Carers

Out of work

Low waged

UNIVERSAL CREDIT

INCOME SUPPORTINCOME-BASED JSAINCOME-RELATED ESA

CTC/WTC

SF BUDGETING LOANS

COMMUNITY CARE GRANTS

CRISIS LOANS

HB/CTB

How Much Is It

Standard allowance • Single claimant or couple (joint

claimants)Additional amounts• For a child• For a disabled child• For limited capability for work• Higher disability addition• For caring for a disabled person• For rent or mortgage

Going Back To Work

Earnings disregard

Single taper rate

Net earnings

Universal credit

Adapted from 21st Century Welfare, DWP, July 2010

Basic allowanceout of work or low wagedreplaces IS, JSA, ESA, WTCAdditional amountseg, mortgage, rent, children, disability, caring

Earnings disregard example - disabled person

• Her earnings disregard is £7,000.• She has housing costs in her universal credit of £70 a

week which means an annual amount of £3,640.• £3,640 x 1.5 is £5,460. • Her earnings disregard of £7,000 is reduced by this

amount.• However her ‘disregard floor’ is £2,080, and her

disregard will not reduce below this.• £40 pw of her earnings will be disregarded.• After that her UC will be tapered away at 65%.

Claimant Commitment

Four groups

• No work-related requirements

• Work-focused interview only

• Work preparation• All work-related

requirements

How is it Administered

• Online claims and reporting

• Real-time earnings information from HMRC

• Assessment and award made automatically

• DWP administered

• Payments possibly monthly

• All overpayments recoverable

Will It Reduce Child Poverty

• Government’s child poverty strategy gives no figures

• In debate, said increased take up and entitlement changes would mean child poverty would fall by 350,000

• Others say set to rise because of cuts

What’s the Verdict

More InformationCPAG advice and resources:• website www.cpag.org.uk• COMING SOON COMING SOON Universal credit guide• Welfare Rights Bulletin• training• advice line

• www.dwp.gov.uk/policy/welfare-reform