By the end of 2023, more than 6.5 million people are forecast to be claiming Universal Credit (UC), yet in May 2019 only 1.8 million were. Over the next couple of years, millions of people on legacy benefits will be transferred to the new system, making it vital that the new PM ensures the transition is as painless as possible.
The process of ‘natural migration’ is transferring people from legacy benefits to UC without any government action. ‘Natural migration’ occurs when a change in circumstances forces a claimant of legacy benefits to make a claim for UC. While some such changes in circumstances significantly affect what a person can claim, such as having a first child, other changes which force natural migration are less drastic. These include moving to a different local authority or becoming a carer.
In contrast, ‘managed migration’ will occur when the Department for Work and Pensions (DWP) starts moving claimants to UC without them having any change in circumstances, a process which the DWP is currently trialling in North Yorkshire with 10,000 claimants.
Unsurprisingly, the rate of natural migration has increased after UC was fully rolled out across the country in December 2018. The latest DWP figures show that between December 2018 and May 2019, the number of UC claims with a housing element has increased by 299,000. In the same period, the amount of active housing benefit claims has fallen by 255,000. Indeed, the vast majority of legacy benefit claimants will move to UC due to natural migration by 2026, though the Government expects to finish managed migration by December 2023 for all claimants.
People who are naturally migrating are forced to wait five weeks before receiving their first UC award. Bright Blue research has identified this as the most problematic design element of UC. A majority of claimants do not have access to any significant savings, which means that many have to rely on family and friends for financial support, while others fall into commercial debt or face rent and bill arrears.
The Government has already made some efforts to smooth out the natural migration process. For those who claim Housing Benefit and are moving to UC, the Housing Benefit is paid for an additional two weeks whilst they are moved to the new system. All claimants also have an option to request an advance payment while waiting for their first UC award. However, this advance payment has to be repaid from future UC payments and this reduction can negatively impact low-income households who already have significant difficulties budgeting month-to-month.
The Government is also introducing a two-week run on Jobseeker’s Allowance and Income Support for those first transitioning onto UC, but this will only come into effect from July 2020, by which time thousands of claimants on these benefits will migrate without such support. Bringing forward the introduction of this measure is important to assist those who are naturally migrating.
The new Government should also follow the recommendation that we have set out in our report on UC, Helping Hand?, and provide a one-off upfront payment worth at least 25% of their initial UC award as soon as a claimant first comes onto UC. In combination with the above measures, managing the five-week wait period should be much easier for those migrating from legacy benefits and for new claimants.
Another major issue is the lack of transitional protection for claimants who are naturally migrating. Applicants who will be moved to UC by DWP and stand to lose out financially will receive an extra award to ensure that they are not worse off as a result of the transition. The IFS estimates that around 40% of individuals transitioning to UC will lose at least £100 per annum and 17% will lose more than £1,000. The latter category includes 24% of all lone parents and 14% of all individuals in work on legacy benefits. For low-income households, such a sudden loss of income is likely to be a major shock and cause financial hardship while the household adjusts.
While it would be impossible to provide transitional protection to all those naturally migrating to UC, as many changes in circumstances can entail significant shifts in their entitlements, the Government should at least consider providing such protection where the change has not had a significant impact on a person’s benefit award. Furthermore, the Government should also offer such transitional protections to those who are choosing to move to UC of their own accord. This would remove the incentive for many claimants to wait until they are migrated by the Government and ensure that transitional protection is available to all who need it.
UC has been beset by numerous problems since its very beginning, and it is vital to take them as valuable lessons. With millions of people moving to UC in the next few years, now is the best time for the new PM to take rapid action on UC to ensure that these people do not encounter the problems that have already been identified and do not have to suffer as they transition to the new system.
Anvar Sarygulov is a Researcher at Bright Blue. Image licensed under the Open Government Licence v1.0.
