Universal Credit

Speaker name

December 2012

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.

• DWP has undertaken extensive stakeholder engagement throughout the development of the Regulations. This is continuing as part of the development of delivery plans and guidance to support claimants and staff.

• Social Security Advisory Committee (SSAC) consulted on the draft Regulations in June 2012. The Secretary of State’s response to the SSAC Report on the Regulations was published on 10 December 2012.

Why do we need Universal Credit?

• We are simplifying a complex system of multiple benefits:

– the current system has over 10,000 pages of guidance for advisors

– it is expensive to administer

• We are making work pay:

– more help for low income working families

– claimants will keep more of what they earn

– improving incentives to increase hours of work

– simplified system will make moving to work feel less ‘risky’

What is 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 benefits and credits with the Universal Credit and a single set of rules

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

that will help us deliver an internet-age service whilst continuing face-to-face support for those who need it

transforming lives and society through work

Payments are paid to different adults in a household and for various periods

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)

Conditionality: some benefit claimants are capable of working but have no obligations to look for work

Universal Credit will personalise conditions according to people’s capability and circumstances

Work incentives can be very low, benefits are reduced to take account of earnings but different benefits have different rules

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

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

How is Universal Credit different?Current System Universal Credit

Personal Independence Payment

Universal Credit

Simplifying a complex system

Child Benefit, Carer’s Allowance (will remain)

Income related JSAIncome related ESAIncome Support (including SMI)Working Tax CreditsChild Tax CreditsHousing Benefit

Disability Living Allowance

Contributory JSA and ESA (conditionality rules changing)

Council Tax Benefit (Localised Council Tax Schemes)

Current system

Pension Credit… to include support for housing

and children

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

200

100

0100

£1

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£5

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£4

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£3

00

£2

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£100 £300£200

£0

£400 £500

Universal Credit payment

Total in-pocket income

Universal Credit: lone parent with two children

£600 £700

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.

Real Time Information pilot

• RTI pilot launched on schedule on 11 April 2012. RTI is on track and the pilot is going well.

• The purpose of the pilot is to allow HMRC to learn from how RTI works in practice, enabling them to identify IT issues that come to light and to hone its guidance and support materials

• By end September, over 1.9m individual records had been received from over 1,800 PAYE schemes.

• Further pilot expansion from November and for PAYE records for 6 million individuals to be reported in real time by up to 250,000 PAYE schemes by March 2013.

• External confidence in the pilot growing. HMRC has extended scope of expansion, allowing software developers / payroll bureaux to join or extend their involvement and inviting large employers to join early.

• In addition, from November, new employers will be able to use RTI from the outset.

Designed and built around real claimant journeys

Universal Credit

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

processes–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

Universal Credit – why a digital service?

• The service will be digital by default because: – it is better for claimants, staff and taxpayers. It is:

– the future is digital:

available flexible responsive

informative integrated accessible

Most jobs need digital skills

Mobile devices more prevalent

Online services help people save money

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.

DWP

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

through implementing JSAOL and using the lessons learned to shape future actions to support channel shift

Private Sector

In partnership with stakeholder organisations, persuading major employers to support and encourage their people to use work facilities to access online services

During migration

Delivering targeted & timed advice and guidance to claimants on why and how to get online

Public SectorDeveloping innovative approaches to getting social housing tenants online through the pilot Digital Deal Initiative Using customer contacts to deliver ‘digital interventions’ (e.g. when tax credits are claimed)

HMRC are introducing iForms this autumn and improving information services on new website

Voluntary Sector

Collaboration with Go On to extend our reach to a wider range of delivery partners than we can influence on our own

Working with voluntary sector who help our claimants

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

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

Universal Credit - delivery

• DWP will lead delivery, drawing on Local Authority and HMRC expertise. But we are keeping options open for approaches to delivery in the longer term.

• DWP and HMRC have announced the sites that will deliver the telephony and processing services for the first phases of Universal Credit from October 2013– DWP Benefit Processing Centres – Birkenhead, Bolton,

Canterbury, Cosham, Glasgow, Sunderland, Wolverhampton, Wrexham

– DWP Telephony Contact Centres – Bangor, Bootle, Derby, Dundee, Grimsby, Makerfield, Middlesbrough, Paisley

– HMRC sites – Blackpool (Ryscar House), Merry Hill Contact Centre

• Telephony and processing sites that are not listed will continue to deliver existing benefits. Further delivery sites will be announced in spring 2013 and 2014.

Live Innovation Trialling (started in April 2012)• To trial components of the end-to-end Universal Credit service proposition in a live

environment with real people in real time

Model Office (first took place in April 2012)• A series of incremental, integrated tests in a ‘controlled’ environment that will be built as

the Universal Credit system, processes and support products are developed

Direct Payment Demonstration Projects (started June 2012)• Testing key elements of incorporating housing support into Universal Credit whilst

protecting the financial position of social landlords

Local Authority-led pilots (2013 focus - from autumn 2012)• Testing service integration, particularly design of face-to-face service delivery, at local

level for improved claimant support and work focus

Pathfinder (planned for April 2013 in Greater Manchester and Cheshire)• An early implementation of Universal Credit – to enable us to learn from experience and

build confidence.

Testing before delivery

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.

North Dorset

RushcliffeMelton

Bath & NES

Oxford

Lewisham

West Lindsey

Caerphilly Newport

Birmingham

North LanarkshireWest Dunbarton

Pathfinder

Oldham

Tameside

Dumfries &Galloway

Edinburgh

Wakefield

Shropshire

SouthwarkTorfaen

WarringtonWigan

Key: Pathfinder

LA-led pilots Direct Payment Demonstration Projects

2013 focus pilots - Twelve pilots will run from autumn 2012 to September 2013 to explore how local expertise can support residents to claim Universal Credit.

2013 focus pilots will look at:- encouraging claimants to access online support independently; - improving financial independence and managing money;- 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 claimants.

North Dorset

RushcliffeMelton

Bath & NES

Oxford

Lewisham

West Lindsey

Caerphilly Newport

Birmingham

North LanarkshireWest Dunbarton

Local Authority-led Pilots

OldhamWigan

Dumfries &Galloway

Edinburgh

Wakefield

Shropshire

SouthwarkTorfaen

Key: LA-led pilotsPathfinder preparation projectsDirect Payment Demonstration Projects

Universal Credit implementation – key dates

APRIL 2013

From OCT 2013

During 2014

2017

Pathfinder begins

National introduction of Universal Credit starts – gradual introduction and testing of further scope and functionality, and phasing out of

claims for existing benefits

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 budgeting

• 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 supportExceptions – developing an exceptions framework for those not able to manage Universal Credit, even with support

Housing

Universal Credit

• 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

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.

Six local authorities & housing associations are now trialling direct payments of Housing Benefit to selected tenants

Project timeline

Oxford

Direct Payments Demonstration Projects

Edinburgh

Wakefield

Shropshire

SouthwarkTorfaen

Jun 2012 Projects started

Jul 2012 First direct payments to selected tenants in LAs in England and Wales

Jul 2012 First bi-monthly Learning Report produced – summary shared on Learning Network

Aug 2012 First direct payments to selected tenants in Edinburgh

Jan 2013 ‘Learning the Lessons’ report published

Jun 2013 Project completes

Aug / Sep 2013

Final Project evaluation report published

Universal Credit and Pension Credit

• As a result of the introduction of Universal Credit the following changes will be made to Pension Credit:

– help with eligible rent. Support for eligible rent for customers over Pension Credit qualifying age will be provided through a new component of Pension Credit called Housing Credit

– help with dependent children. A new additional amount will be included in the Guarantee Credit element of Pension Credit for dependent children.

• The earliest date that these changes will be incorporated into Pension Credit new claims is currently 12 months after the go-live of Universal Credit e.g. October 2014.

• The current planning assumption is that migration of Housing Benefit and Tax Credit information for Pension Age customers will be completed by October 2017.

• The intention is that the migration process for pension age customers will be as intervention free as possible. The underlying principle of the migration approach will be to ensure continuity of financial support.

Working in partnership

Universal Credit

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 HMRC

• 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

Universal Credit - working with Scotland

• Social security is a reserved matter for the GB government, but it interacts with many devolved matters. The Programme is engaging with:

– Scottish Government – members of Universal Credit Senior Stakeholder Board.

– Scottish Local Authorities – represented on Universal Credit Local Authority forums, the Convention of Scottish Local Authorities (COSLA) are members of the Senior Stakeholder Board, input from several Scottish Local Authorities to Universal Credit working groups.

– The Universal Credit Scottish Advisory Group - a tri-partite forum for Scottish Government, COSLA and DWP, to consider impact of Universal Credit in Scotland, share best practice and consider where better alignment is needed between welfare reform measures.

– The third sector and other stakeholders – for example, this year the Programme attended the Scottish Council of Voluntary Organisations annual conference, Capita’s Scottish welfare reform conference, visited Glasgow Housing Association. We have set up a Support & Exceptions Working Group for Scotland.

• Scotland is represented in testing of Universal Credit – Direct Payment Demonstration Project in Edinburgh and Local Authority-led pilots in West Dunbarton, North Lanarkshire and Dumfries & Galloway.

Universal Credit – working with Wales

• Social security is a reserved matter for the GB government, but it interacts with many devolved matters. The Programme is engaging with:

– Welsh Government – members of Universal Credit Senior Stakeholder Board.

– Welsh Local Authorities – the Welsh Local Government Association (WLGA) are members of the UC Stakeholder Board and are also represented on the UC Transition Working Group, and we have visited a number of Local Authorities in Wales.

– The Universal Credit Welsh Advisory Group - a tri-partite forum for Welsh Government, WLGA and DWP, to consider impact of Universal Credit in Wales and share best practice.

– The third sector and other stakeholders – for example, our visits to Welsh Local Authorities have involved meetings with landlords (social and private) and hearing from third sector partners involved in supporting claimants with complex needs. Developing a Support & Exceptions Working Group for Wales.

• Wales is represented in testing of Universal Credit – Direct Payment Demonstration Project in Torfaen, Local Authority-led pilots in Caerphilly and Newport.

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

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.

Any questions?