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Welfare to Work Convention

Manchester 9 and10 JulyUniversal Credit - breakout sessions

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The Reform Story

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Overview (1) The Reform Story

“A system that was originally designed to support the poorest in

society is now trapping them

in the very condition it was

supposed to alleviate”

Iain Duncan-Smith, Secretary of State for Work and Pensions

• The Welfare Reform Act introduces the most fundamental reforms to the social security system for 60 years. It aims for a simpler, fairer benefits system and to ensure work pays.

• Money needs to be targeted more effectively; we have to ensure that support continues to be available to those who need it most. Employment must be an aspiration for everyone who is able to work.

• Our services need to change to reflect the diversity and complexity of the issues that many people in society face today, requiring more joined-up working across government and beyond.

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Overview (2) The Reform Story

• We are introducing greater fairness to the welfare and pensions systems by making work pay and reinvigorating incentives to save for retirement, whilst protecting the most vulnerable – disabled people and pensioners.

• The nation’s finances also need to be put on a more sustainable footing – while this means making difficult decisions on tax and spending, we believe it is possible to do this and help people lift themselves out of poverty, and stay out of poverty, through work and saving backed by the right support and encouragement.

• Our Reforms will:- ensure people are always better off in work than on benefits- provide unconditional support for disabled people that need it- prepare the long term unemployed for the world of work- ensure people receive a fairer pension and are encouraged to save for retirement- support separating families.

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• January The Shared Accommodation Rate was extended to under 35’s

• March Social Justice: Transforming Lives published

• April Jobseeker’s Allowance Domestic Violence Regulations came into force

» Local Housing Allowance rates frozen

• May Time limiting for Employment and Support Allowance claimants in the Work Related Activity Group came into effect

Lone Parent Income Support entitlement changed for new and repeat claims

Direct mail activity alerting claimants to the fact they may be affected by the benefit cap began

Tougher benefit fraud administrative penalty came into force

The Story so far: January - May 2012 The Reform Story

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• May-November Lone Parent Income Support entitlement changed for existing claims

• June Direct Payment Demonstration Projects began

• July Local authority/DWP data sharing regulations to support welfare services came into effect

• Autumn Universal Credit local authority pilots began

• October The revised Jobseeker’s Allowance sanctions regime implemented

Civil penalty for negligently giving incorrect information / failing to report a change in circumstances came into force

• December The revised Employment and Support Allowance sanctions regime was implemented

2012 child maintenance scheme opened on a pathfinder basis

The Story so far: June - December 2012 The Reform Story

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• January Single Tier Pensions White Paper published

• April Universal Credit Pathfinder – start of early Universal Credit rollout in Manchester and Cheshire areas

Benefit cap came into force for new and existing claimants in Bromley, Croydon, Enfield and Haringey local authorities

Removal of the spare room subsidy came into force

Controlled start for new claims to Personal Independence Payment for those living in the North West and parts of the North East of England

Introduction of Localised Support for Council Tax

Community Care Loans and Crisis Grants abolished and new Local Welfare Provision introduced

Publication of Social Justice: transforming lives – one year on

• July Roll-out of Universal Credit in Wigan

The Story so far: 2013 The Reform Story

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Social Justice

• The government published its Social Justice strategy “Transforming Lives” in March 2012.

• Previous approaches to tackling disadvantage and social exclusion have focused on increasing income levels of poorer families to bring them above a notional poverty line.

• More working age adults live in poverty than ever before.

• Social Justice sets out new approach to understanding and tackling the root causes of poverty rather than its symptoms.

• Social Justice principles will increasingly influence our overall direction, our policies, and the delivery of DWP services.

Social Justice

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Welfare Reform and Universal Credit

A policy

A benefit

A gateway

A platform

An ambition

that tackles welfare dependency, poverty and worklessness by making work pay

that replaces a complex system of working-age (in/out work benefits and credits) with the Universal Credit and a single set of rules

that together with our employment support programmes, helps people into work

largely self service; internet-age and digital - whilst continuing face-to-face support for those who need it

transforming lives and society through work

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• Universal Credit (UC) replaces six in work and out of work benefits

• UC is formed around a new ‘claimant commitment’ which sets out what is expected in return for assistance

• Claimants will be able to claim their benefits online

• A single payment will be made to a household rather than an individual. This will include housing costs. It will be paid monthly, in arrears.

• As claimants earn more money, financial support will be withdrawn at a slower rate than is the case under the current system.

• Local support will be available to help claimants where appropriate, through DWP and local authority delivery partnerships.

Universal Credit – the service

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Andy Chiga and Felicity Ridgway10 July 2013

universalcredit.pbs@dwp.gsi.gov.uk

Welfare to Work Convention

Personal Budgeting Support

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REQUIREMENT FOR A PERSONAL BUDGETING

STRATEGY IS DRIVEN BY THESE CHANGES

Context - Claimant Preparation

Housing costs direct to tenant

Single payment to household

Monthly Payment

We want to help people to be able to manage their own finances successfully, whether they arein or out of work

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Personal Budgeting Support – overview

Alternative Payment

Arrangements

Moneyadvice

Financial products

Claimants managing their

money

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Alternative Payment Arrangements

• For a minority of claimants, alternative payment arrangements may be required; these might include – paying the rent directly to the landlord– making more frequent than monthly payments – splitting the payment within the household

• We will also have the option to make rent payments direct to the landlord if a claimant reaches a certain level of rent arrears.

• These alternative payment arrangements will be considered on a case by case basis and assessed on their individual merits.

• When considering alternative payment arrangements, a series of Tier 1 and Tier 2 factors indicating potential support needs will be used to help to decide if these arrangements are appropriate to an individual.

• The decision about whether an alternative payment arrangement is suitable will be made by a UC adviser through the PBS process. Information from a third party i.e. the claimants’ representative, and / or their landlord can be used to inform a decision.

• Subject to a review, the goal being that claimants move to the standard payment over time supported by money advice.

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Alternative Payment Arrangements – consideration factors

Tier One factors – Highly likely / probable need for alternative payment arrangements

• Drug / alcohol and / or other addiction problems e.g. gambling • Learning difficulties including problems with literacy and/or numeracy• Severe / multiple debt problems • In Temporary and / or Supported accommodation• Homeless • Domestic violence / abuse• Mental Health Condition• Currently in rent arrears / threat of eviction / repossession• Claimant is young either a 16/17 year old and / or a Care leaver• Families with multiple and complex needs

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Alternative Payment Arrangements – consideration factors

Tier Two factors - Less likely / possible need for alternative payment arrangements

• No bank account • Third party deductions in place (e.g. for fines, utility arrears etc)• Claimant is a Refugees / asylum seeker• History of rent arrears• Previously homeless and / or in supported accommodation• Other disability (e.g. physical disability, sensory impairment etc)• Claimant has just left prison• Claimant has just left hospital• Recently bereaved• Language skills (e.g. English not spoken as the ‘first language’).• Ex Service personnel• NEETs - Not in Education, Employment or Training

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Money advice

Money advice will include:– Online budgeting tools for claimants who can help themselves - such as those offered

by Money Advice Service and Citizens Advice.– Advice services offered by external organisations for those who need more support

with, for example, getting a bank account or doing a monthly budget plan.

• Advice will be delivered through online, telephone and face-to-face channels by expert providers at a national and local level through the Local Support Services framwork.

• A personal planner is available on gov.uk to help claimants understand and prepare for financial changes arising from the introduction of Universal Credit. It asks claimants a set of questions about their readiness for claiming Universal Credit and, depending on the answers given, sets out an individual action plan.

• We are also trialing the new concept of a Budgeting Club for new and existing claimants. This will provide face to face practical help to claimants, initially in a group setting and subsequently on a one to one basis if needed.

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Financial Products

• 75% of people are paid earnings monthly in arrears. Monthly payment of benefit will prepare households for the reality of budgeting on a monthly income, will ease the transition into work, and will make it easier for households to take advantage of cheaper tariffs for essential costs such as utility bills.

• The majority of Universal Credit claimants will continue to be paid through mainstream current or basic accounts.

• Having access to a transactional account will enable claimants to make electronic payments out of the account – such as Direct Debits or standing orders – for bills such as rent, gas and electricity.

• Up to 1.3 million potential UC claimants currently do not use a transactional bank account to manage their benefit payments. Most of these individuals currently use a Post Office Card account (POCa) which does not offer transactional facilities.

• We are looking at ways to make accounts with budgeting functionality, such as ‘jam jar’ accounts, more widely available. We are consulting with financial providers across the private, social and third sectors and considering the best ways to make these types of products more available.

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PBS initial filter

APA data gather

Agrees Claimant

Commitment

PBS filter 2

PBS filter1

PBS provision

UC claim continues

Signpost to MAS

Yes to any

No to all

APA decision& review set

Implement APA

PE

No PBS action

No PE

UC paid

Refer to PBS provider where appropriate

Notify APA decision

To quickly filter out those who

need no support or can self serve

To identify those most likely to

need APA

To confirm money advice is needed

ClaimsUC

Completing the APA data gather

Glossary:• APA – alternative payment arrangement• MAS – Money Advice Service• PBS – personal budgeting support• UC – Universal Credit

PBS initial filter

APA data gather

Agrees Claimant

Commitment

PBS filter 2

PBS filter1

PBS provision

UC claim continues

Signpost to MAS

Yes to any

No to all

APA decision& review set

Implement APA

PE

No PBS action

No PE

UC paid

Refer to PBS provider where appropriate

Notify APA decision

To quickly filter out those who

need no support or can self serve

To identify those most likely to

need APA

To confirm money advice is needed

ClaimsUC

Completing the APA data gather

Glossary:• APA – alternative payment arrangement• MAS – Money Advice Service• PBS – personal budgeting support• UC – Universal Credit

The PBS High Level Design (Pathfinder)

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01/01Date of Claim

+7 days

1st UC PaymentCalc/notification

to claimant:01/02

1st UC Payment

Received by Claimant:

07/02

Regular UC Assessment Period

2nd UC PaymentCalculation:

01/03

2nd UC PaymentReceived by Claimant:

07/03

UC Payments

30/0 28/02

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More Frequent Payments: bi-monthly

01/01Date of Claim

+7 days31/01 28/02

½1st Payment (a)Received by Claimant:

07/02

½2nd Payment (a)Received by Claimant:

07/03

Regular UC Assessment Period

½3rd Payment (a)Received by Claimant:

07/041st Payment (b)

Received by Claimant:

21/10

2nd Payment (b)Received by Claimant:

22/03

(14 days) (14 days) (15 days) (16 days)

31/03

1st UC PaymentCalc/notification

to claimant:01/02

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UC Advance: new claims

• A claimant can request an advance of up to 50% of their indicative UC award.• The advance can be claimed at any point during the first month and will be issued via BACS after 3 days.• The advance will be recovered from UC payments in equal deductions over the following 6 months.

+7 days31/01 28/02

Regular UC Assessment Period

(35 days)

1st payment:£1000

2nd payment:£1000

Standard Monthly PaymentPayment minus repayment of UC advance(new claim)

UC Advance(up to 50%)£500

£926.67 £926.67

(3 days)Based on an indicative claim of £1000 pcm

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UC Advance: benefit transfers

• A claimant can will be offered an advance of up to 50% of their indicative UC award.• Our current assumption is that the advance will be issued half way through the initial claim period. • The advance will be recovered from UC payments in equal deductions over the following 12 months.

+7 days31/01 28/02

Regular UC Assessment Period

(19 days)

1st payment:£1000

2nd payment:£1000

Standard Monthly PaymentPayment minus repayment of UC advance(benefit transfer)

UC Advance(up to 50%)£500

£958.34 £958.34

(19 days)Based on an indicative claim of £1000 pcm

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Thank you and any questions?