Universal Credit

December 2012
Kairen Francis
Partnerships Manager
DWP Jobcentre Plus Staffordshire and Shropshire
The Welfare Reform Act 2012
The Act introduces a wide range of reforms to:
– make the benefits and tax credits system simpler;
– create the right incentives to get more people into work;
– protect the most vulnerable in our society: and
– deliver fairness to those claiming benefit and to the tax payer.
Universal Credit is at the heart of the Act and the Government’s reforms.
Regulations needed to implement key policies in the Act, including Universal
Credit, were laid and published on 10 December 2012.
What is Universal Credit?
A policy
that tackles welfare dependency, poverty and
worklessness by making work pay
A benefit
that replaces a complex system of working-age benefits
and credits with the Universal Credit and a single set of
A gateway
that together with our employment support programmes,
helps people into work
A platform
that will help us deliver an internet-age service whilst
continuing face-to-face support for those who need it
An ambition
transforming lives and society through work
How is Universal Credit different?
Current System
Universal Credit
The welfare system has more
than 30 benefits each with their
own rules and criteria
Universal Credit provides a new single online
system of means-tested support for working-age
people who are in or out of work
Work incentives can be
very low, benefits are reduced to
take account of earnings but
different benefits have different
Universal Credit will make work pay.
Financial support will be reduced at a consistent
and predictable rate and people will generally
keep a higher proportion of their earnings
Conditionality: some benefit
claimants are capable of working
but have no obligations to look for
Payments are paid to different
adults in a household and for
various periods
Universal Credit will personalise conditions
according to people’s capability and
Universal Credit is paid on a calendar monthly
basis in a single payment to each household
(we will retain ability to pay more frequently or to
split payment in exceptional circumstances)
Simplifying a complex system
Current system
Income related JSA
Income related ESA
Income Support (including SMI)
Working Tax Credits
Child Tax Credits
Housing Benefit
Universal Credit
Disability Living Allowance
Personal Independence Payment
Pension Credit
… to include support for housing
and children
Child Benefit, Carer’s Allowance (will remain)
Council Tax Benefit (Localised Council Tax Schemes)
Contributory JSA and ESA (conditionality rules changing)
Making work pay
• The way UC treats people’s earnings will mean that they are better off in work
than they would be in the legacy system. We want people to be clear that
getting a job and increasing their earnings will benefit them.
• UC is designed to allow people to keep more of their benefit in the transitional
period back to work.
• A simple disregard structure and single taper rate means people are better
able to understand their benefit income.
Work allowances (earnings disregards)
• Disregards are an income allowance, i.e. earnings up to a certain level are
ignored when calculating how much UC they should receive.
• The UC work allowances vary by household composition – structured to focus
on those groups who face the highest barriers to work.
• The rates for 2013-14 were set out in the Autumn Statement 2012.
The taper
• Earnings will reduce UC awards at a steady rate of 65 per cent once work
allowances are exhausted - this means that 35 pence in every pound earned
would be kept.
A simpler system with clear work incentives
Universal Credit: lone parent
with two children
Total in-pocket
Universal Credit
Real Time Information
• HMRC’s Real Time Information (RTI) programme aims to improve the operation of
Pay As You Earn (PAYE) and support the introduction of Universal Credit.
• Universal Credit will make work pay by reducing financial support consistently, taking
actual earnings into account at the time they are received – using RTI.
• Employers will report PAYE income and deductions to HMRC when they pay
employees. If employee is a UC claimant, HMRC will send DWP the information. DWP
will assess UC entitlement on a monthly basis.
• RTI will be simpler and less burdensome for employers; this is a driving factor behind
the changes.
• DWP and HMRC officials have been working closely together on the requirements and
delivery of RTI and its support for Universal Credit.
• Most employers will be required to send PAYE returns in real time from April 2013 and
all employers will be routinely reporting PAYE in real time ready for the start of
Universal Credit in October 2013.
Designed and built around real claimant journeys
Universal Credit – how is the
service being designed?
• Design is focused on claimant journeys
– System is built from scenarios with tangible stories – covering different
household types and circumstances
• Building the system using an ‘Agile’ approach
– Build the system in small pieces
– Continuous testing – allows much earlier testing of the end-to-end
– Continuous feedback loops from claimants and staff
– Solve problems within the design process
– Match requirements to build
Designing the system - tested as we build
Digital by Default
Universal Credit – why a digital service?
• The service will be digital by default because:
– it is better for claimants, staff and taxpayers. It is:
Mobile devices more
Online services help
people save money
– the future is digital:
Most jobs need digital
What are we doing to prepare for channel shift?
We plan to work across government, private sector and voluntary sector boundaries to create, support
and encourage opportunities to deliver the digital message.
We are increasing activities and support to boost take
up of online services, e.g.:
through Digital Champions,
through providing computer access in Job Centres
Public Sector
Developing innovative approaches to getting social
housing tenants online through the pilot Digital Deal
Using customer contacts to deliver ‘digital
interventions’ (e.g. when tax credits are claimed)
through implementing JSAOL and using the lessons
learned to shape future actions to support channel
HMRC are introducing iForms this autumn and
improving information services on new website
Private Sector
Voluntary Sector
In partnership with stakeholder organisations,
persuading major employers to support and
encourage their people to use work facilities to
access online services
Collaboration with Go On to extend our reach to a
wider range of delivery partners than we can
influence on our own
During migration
Working with voluntary sector who help our
Delivering targeted & timed advice and guidance to
claimants on why and how to get online
Providing advice, support and resources to
claimants and potential claimants
Security and identity assurance
• Security is a key issue for Universal Credit.
• Before an online claim can be made, we will seek to authenticate the
identity of the claimant by using secure identification procedures.
• Only where the claimant’s identity is verified will the claim be treated as
authenticated for the purpose of the Universal Credit.
• Where a person’s identity can’t be verified online, we will contact the
claimant and request they bring in documentation to verify their identity.
Delivery - Transition
Universal Credit – implementation
and transition challenge
Universal Credit supports people into work and continues support to
ensure that work pays. To deliver this we need to:
– Convert 12 million claims to 8 million household accounts
– Create a digital platform that both meets the needs of people who
are used to managing their lives online, whilst helping claimants
who need extra support to get online
– Ensure the right support for claimants
– Create a system capable of flexibility and continuous improvement
Pathfinder will take place from April 2013.
It will test new payment system with local
authorities, employers and claimants in a
live environment – before national roll-out.
Will target single, unemployed people, with
or without rented housing costs, in selected
areas in Tameside, Wigan, Oldham and
Warrington local authority areas.
Key: Pathfinder
LA-led pilots
Direct Payment Demonstration Projects
West Dunbarton
North Lanarkshire
Dumfries &
West Lindsey
Warrington Tameside
Bath & NES Lewisham
North Dorset
Local Authority-led Pilots
2013 focus pilots - Twelve pilots will run from autumn
2012 to September 2013 to explore how local
expertise can support residents to claim Universal
2013 focus pilots will look at:
- encouraging claimants to access online
support independently;
- improving financial independence and managing
- delivering efficiencies and reducing fraud & error; and
- reducing homelessness.
Post 2015 focus pilots – on the longer term role for
local authorities in supporting Universal Credit
Key: LA-led pilots
Pathfinder preparation projects
Direct Payment Demonstration Projects
West Dunbarton
North Lanarkshire
Dumfries &
West Lindsey
Bath & NES
North Dorset
Universal Credit implementation –
key dates
APRIL 2013
Pathfinder begins
OCT 2013
National introduction of Universal Credit starts
– gradual introduction and testing of further
scope and functionality, and phasing out of
claims for existing benefits
During 2014
Expansion - new claims from people in work
and moving current claimants to Universal
Credit in phased approach
Universal Credit roll-out complete
Supporting financial inclusion
• Exploring better tools
and accounts
• Supporting better
• Differentiation to
recognise and respond
to varying needs
Financial Products – working with
range of banking and financial
product providers to make services
more accessible and supportive to
low income households. Have
issued a call for interest to providers
to deliver these products
Tailored Support - working with
advice sector to ensure claimants
are able to access appropriate
budgeting support
Exceptions – developing an
exceptions framework for those not
able to manage Universal Credit,
even with support
Universal Credit and housing
Universal Credit will be paid to claimants who are in work and out of work.
As most businesses pay monthly, Universal Credit will also be paid monthly.
Claimants will be responsible for managing all household costs, including
rent payments.
• To help claimants prepare for Universal Credit, we will test key elements of
incorporating housing support into Universal Credit whilst protecting the financial
position of social landlords
• Direct Payment Demonstration Projects will run for a year in six local authority
areas including Shropshire. Jun 2013Project completes , Aug / Sep 2013 Final Project
evaluation report published
Working in partnership
Universal Credit - working with Local
Authorities (LAs)
• We are using LA expertise, skills and success to inform the
Universal Credit delivery.
• LA groups are represented within the Universal Credit
Programme and individual LAs are represented on a range of
working groups.
• LAs are taking part in the Direct Payment Demonstration Projects
(started in June) and LA-led pilots (from autumn 2012).
• Have visited over 120 LAs and the information obtained has
helped shape the development of Universal Credit.
• Started a series of events with Local Authorities across Great
Britain on Universal Credit business change impacts.
Universal Credit – working with
• The Programme is working in partnership with HMRC, using their experience
and lessons learned from tax credits and knowledge of in-work customers.
HMRC is also:
– Developing new processes and IT to stop tax credits
– Transferring the HMRC people best suited to help run the new UC service
– Safeguarding the current service for tax credit customers and considering the
implications of UC on wider tax policies and administration.
• A dedicated ‘HMRC Business Change Team’ has been established in the
Programme to ensure the right people from HMRC are involved with the
development of UC
• HMRC RTI and tax credit officials are seconded to the DWP UC Programme to
provide tax credit and employer expertise.
• Joint Ministerial oversight (Lord Freud and David Gauke) and oversight group
chaired by Iain Duncan Smith
How is the Programme engaging with
external organisations?
Stakeholder Strategy in place
• Engagement at different levels
• Links to appropriate areas within Programmes
Includes engagement at:
Roundtable Senior Stakeholder Forums
Events targeted at areas of design
Local engagement with local stakeholders
Touchbase e-bulletin
Summary and conclusion
• Universal Credit is at the heart of the Government’s welfare reforms – aims to simplify the
benefits system and make work pay, while providing support for those who need it.
• We are making good progress in delivering Universal Credit.
• We are building a 21st Century benefits system – designed with flexibility and with
continuous improvement from the outset.
• We are designing a service based on claimant journeys – involving them and staff in
that design from the outset.
• We are aware that there are challenges ahead.
• We are working with our partners and stakeholders, using their specialist knowledge
and skills to understand and meet those challenges, so we design and deliver a successful
service for our claimants.