Some welfare benefits recipients may see their entitlement fall by thousands per year during the move from legacy benefits to Universal Credit, the Work and Pensions Committee (WPSC) have said in a new report. While others may be able to receive more, it’s those who move to Universal Credit via natural migration, thus not eligible for transitional protection, who could be affected. The select committee said that these people can face what it called the “impossible choice between hardship now or hardship later” in the department’s up-front debt load “solution” to the “deep problems” of the initial wait period. Around three million families are expected to lose out on the new system, compared to 2.4 million who will be better off, the committee said.
The average loss works out at £59 per week, it claimed, or around £3,000 per year.
The report also claims that the matter of when existing benefit claimants will need to naturally migrate to Universal Credit “baffles even experienced benefit advisers”.
MPs have also said that Universal Credit requires a “health warning”.
Frank Field MP, Chair of WPSC, said: “In the history of humankind, has there ever been an example of a Government introducing a fundamental welfare reform and none of its employees being able to tell if it will leave people better or worse off?
“Hardly surprising that baffled and anxious claimants are finding themselves trapped in what the Department chillingly calls the “lobster pot” of Universal Credit, and with much less to live on as a result.
“The UC application page needs to come with a health warning, and anyone who gets inadvertently caught in DWP’s lobster pot should be compensated.”
Universal Credit is currently available to claim across the UK for new claimants and for benefits recipients who have had a change in circumstances.
The system is replacing six legacy benefits:
- Child Tax Credit
- Housing Benefit
- Income Support
- Income-based Jobseeker’s Allowance (JSA)
- Income-related Employment and Support Allowance (ESA)
- Working Tax Credit
The Department for Work and Pensions (DWP) announced a pilot scheme earlier this year, which was due to begin in July 2019 in Harrogate, North Yorkshire.
It was expected to see benefits recipients on the scheme being moved onto Universal Credit – a process known as “managed migration”.
The Gov.uk website says: “Universal Credit is being introduced in stages across the UK.
“You do not need to do anything until you hear from the Department for Work and Pensions (DWP) about moving to Universal Credit, unless you have a change in circumstances.”
In the report, the committee highlights how the death of a legacy benefits recipient’s partner can be classed as a change in circumstances – thus requiring them to claim Universal Credit.
It also addresses how a disabled person moving into an adapted house in a different local authority area could face being shifted onto Universal Credit.
While the report highlights how the introduction of the “Gateway barrier” has stopped this happening to some vulnerable, disabled claimants.
The select committee have recommended that the DWP provides full compensation to all claimants who may have lost out financially, who have moved to Universal Credit “prematurely, despite their circumstances remaining the same”.
A DWP spokesperson said: “Universal Credit helps people into work faster than the old system and provides targeted support.
“Around one million disabled households will gain an average of £100 more a month, and changes to work allowances mean 2.4 million households will be up to £630 per year better off.”