What is Universal Credit?
To simplify the benefits system, the Government have created a new benefit, called Universal Credit, to replace most existing benefits and tax credits for people of working age - wrapping up all these kinds of payments into one benefit. The benefits being replaced include:
- Working Tax Credit
- Child Tax Credit
- Housing Benefit
- Income Support
- Income-based Jobseeker's Allowance
- Income-related Employment and Support Allowance
The Universal Credit will be 'means-tested' which means that anyone who applies will have their income and savings assessed, and if they, or a partner, earn over a certain amount or have a certain amount of savings they will be unable to get the Universal Credit.
There will be a basic rate called the 'standard allowance' and extra amounts for people in different circumstances - for example, if they have children, a disability or need help with housing costs.
What will happen to me if I am already getting one of these benefits?
The Government plans to move everyone on the benefits listed above onto the Universal Credit
- In Nottingham, new claimants with relatively simple claims i.e. people who are single, with no children and are looking for work, will apply for Universal Credit rather than Job Seekers Allowance from February 2016
- From 2017 all new claimants who would previously have applied for one of the benefits being replaced will claim Universal Credit
- After 2017, the Government will begin to move existing benefit claimants on to Universal Credit. All claimants should be transferred to Universal Credit by 2021
Will I get less money on Universal Credit?
The Government has said that no-one will be worse-off as a result of moving onto the Universal Credit, because the Government will provide 'cash protection' when individuals switch over to the Universal Credit.
So if you were moved onto the Universal Credit and it looked like you would end up worse-off, the Government has said it will provide a top-up payment to keep your income at the same level as your previous benefit.
However this protection would not be permanent - if your circumstances changed your income would no longer be guaranteed.
This protection only applies to people who transfer from the current system to Universal Credit. New claimants may find that Universal Credit is less generous than the current benefit system, but the impact will vary depending on each households' circumstances. Changes due to be introduced in April 2016 will reduce the amount of money people can earn before their Universal Credit is reduced and the rate at which UC is withdrawn will increase.
Claimants who have a third child after April 2017 will only be able to claim the child element of Universal Credit for their first two dependent children.
But if I am moved onto Universal Credit, won't I be forced to look for work?
All adults in a Universal Credit claiming will have to sign a claimant commitment which outlines what they are expected to do in order to claim their benefit. This will vary depending on a person's circumstances but will normally require them to either look for work or to prepare themselves to return to work. Working claimants earning below a certain amount may also be required to increase their earnings by either working more hours or finding better paid work.
It is made very clear in the new laws that the Department of Work and Pensions will not be allowed to force anyone with 'regular and substantial caring responsibilities' to do any 'back to work' activity.
This is very important, because the Government plans to introduce much tougher measures for people on Universal Credit who are forced to look for work - including the removal of their benefits if they are not considered to be trying hard enough.