The benefits of moving: Managing the transition of existing claimants to Universal Credit

Published on Tax and Welfare

The long implementation of Universal Credit (UC) has been far from smooth and we’ve become all too used to negative stories about roll-out delays and, more seriously, payment problems and financial hardship for those accessing the new system. The government, however, is likely to have been cheered at least by the fact that the roll-out has picked up pace in recent months, with the full system set to be in place across all job centres in the UK by the end of the year. But implementation is shortly to enter its next and, arguably most difficult, phase: ‘managed migration’. This brings new risks, but opportunities too.

To date, all UC claims have been made by people who are newly entitled following a change in their circumstances. This ‘natural migration’ will continue over the coming years, but will be supplemented from the middle of 2019 by the gradual transition of existing benefit recipients onto UC. Successfully implementing this managed migration will be key if UC is to stand any chance of becoming accepted as an improvement on the current system.

Sharp budget cuts and significant processing issues have acted to erode many of the hoped-for gains associated with the introduction of UC, weakening what was once solid cross-party support. Going forward, the government must ensure it protects what now represents the main remaining argument for persisting with such a major programme of welfare reform; namely its potential to boost benefit take-up among recipients. This could be very significant, with the OBR estimating that 700,000 families could benefit by a total £2.9 billion a year under UC as a result of receiving all the support to which they are entitled.

Yet UC’s reputational issues put this gain at risk, with mistrust of the system potentially putting families off making claims in the first place. With that in mind, this note considers how best to avoid further implementation difficulties over the course of the managed migration – setting a course that instead gives UC the best possible chance of coming to be seen as a positive step forward.

In doing so we are clear that the managed migration process and support offered through transitional protection should not be used to fix wider problems with the generosity of the scheme. Those features – such as the now overall lower generosity for working families – should be addressed for the entire UC caseload, not temporarily for a minority of cases involved in the managed migration.

  • Recommendation 1: Managed migration should only start at significant scale when the DWP is entirely satisfied that the system is ready. To support its assessment, the DWP should ensure that the roll-out of this phase and the results of early testing of different approaches is opened up to monitoring by external experts including SSAC and the Work and Pensions Committee.
  • Recommendation 2: The design of the migration should follow the principle that individuals should not bear the burden of risk to their financial standing due to the migration to UC. Instead it should be borne by DWP.
  • Recommendation 3: The claims process for UC should be reviewed to assess the burden of providing evidence. The managed migration should only begin when the DWP has shown service levels meet a standard agreed with external experts including SSAC and the Work and Pensions Committee. We suggest this should be that 90 per cent of new claims are paid in full and on time.
  • Recommendation 4: The DWP should prioritise migration of simple cases, basing its assessment on the number of different UC elements paid, the burden of evidence required to process a claim and the likely level of ongoing interaction that will be required with Jobcentre Plus advisers.
  • Recommendation 5: While the DWP should continue with its proposal to kick-start the transition of existing cases to UC by issuing migration notifications, it should tie hard deadlines to existing benefit milestones. For tax credit cases, the annual renewals process should serve as a hard cut-off. For ESA cases, tailored individual support should be provided, with existing entitlements maintained under UC. For both tax credit and ESA cases, no existing benefit payments should be stopped outside of a standard renewals or re-assessment period unless the DWP has ascertained that the person has made a successful claim for UC or chosen not to do so.
  • Recommendation 6: The DWP should be clear that it intends to take account of entitled but unclaimed legacy benefits in its transitional protection calculation, by way of helping reinforce the take-up advantage associated with the switch to UC. It should also introduce an earnings disregard to account for small and short-term variation in earnings in order to avoid penalising those with volatile incomes.
  • Recommendation 7: To reduce dependency on transitional protection the government should re-invest in work allowances. To reduce the greatest losses among working families and strengthen financial incentives to increase earnings this should take the form of boosting work allowances for single parents and introducing a second earner work allowance.