The key points on Universal Credit and disability are summarised in the DWP’s Universal Credit Policy Briefing Note #1 – Additions for longer durations on Universal Credit.
The DWP will simplify the rules on disability support under Universal Credit into two awards, a basic award and a higher award. Awards will be based on the Work Capability Assessment.
There will be two awards:
- £25.95 – for people in the ‘work related activity group’ (WRAG)
- £74.50 – for people in the ‘support group’, higher than the current maximum award
Other premiums and additions will be removed. This is in order to simplify the system so that claimants undertake a single assessment and people with higher support needs get more support.
In addition, the earnings disregards for disabled people under Universal Credit are expected to be a minimum of £2,080, rising to £7,000 for those without any housing costs.
The full briefing note published March 24th 2011 is pasted below.
Additions for longer durations on Universal Credit
1. Core objectives
- Universal Credit should support all people to participate fully in society, including remaining in or returning to work. Therefore, Universal Credit will provide more generous support for disabled adults and disabled children than it does for people in similar circumstances who are not disabled.
- We intend that people who are assessed as having limited capability for work, or limited capability for work-related activity as well, should be provided with more support than other people to reflect the extra costs of having longer durations on benefit.
2. Considerations/limiting factors
- The Government intends to reform the current system of multiple, overlapping disability premiums and Tax Credits and instead create a much simpler system.
- The Government does not believe it would be right for resources released from this reform to return to the Exchequer. The last Government, constrained by complexity of the existing arrangements, could only set a very small difference between the two Employment and Support Allowance (ESA) components – some £5. The Government believes that this difference is far too small and means that people who need the most support would get a raw deal from these reforms if that was maintained.
- So as part of these changes, as resources become available the Government intends to raise the weekly rate of the support component equivalent from £31.40 today in stages to £74.50. This will help to focus resources more effectively on severely disabled people.
- As Universal Credit will remove Tax Credits, including the disability elements, support should be available to people both in and out of work to reinforce incentives to work.
3. Key policy proposals
- A Single Assessment: We want to build on the framework of the WCA to develop a supplement to the assessment that will accurately identify individuals with enduring health conditions that limit their long term ability to fully provide for themselves through work;
- Higher Earnings Disregard and Single Taper: creating a work incentive, which allows people to earn between £2,080 a year (i.e. the disregard floor) and £7,000 a year before the standard Universal Credit taper applies – thus keeping 100% of their earnings up to that level before Universal Credit starts to be withdrawn at 65%;
- Two Additions: consisting of a higher addition (support component equivalent), ultimately worth £74.50 per week (up from £31.40); and lower addition (work-related activity component equivalent), worth £25.95 per week (as now). Payment is based on the single assessment;
- Equalised additions for adults and children including increased support for the most severely disabled children: The cash additions for families with disabled children and the cash additions for adults will be aligned, with the lower rate as around £25.95 and the upper rate at £74.50 per week. The higher amount is over £52 a year more than the current rate. The Government will also extend eligibility for the higher rate to children who are severely visually impaired (currently only entitled to the disabled child element). Eligibility for the disabled child additions will, as now, be linked to the rate of Disability Living Allowance they receive;
- Within Universal Credit individuals will only qualify for either a disability or a carer addition, not both. The Government is removing current overlapping provision that allows people to simultaneously claim an addition by virtue of a medical condition and a carer premium for themselves to reflect the fact that the additions are paid in respect of not being able to work through either a medical condition or by virtue of caring responsibilities. However, as now, couples could get a disability addition for one member and the carer addition for the other partner.
- Whilst many people may benefit from Universal Credit, transitional protection will apply to current claimants (for example where people receive the Severe Disability Premium), so that no claimant at the point of transition will be made worse off as a direct result of the introduction of Universal Credit.
4. Policy rationale
- There are 7 different components within the current system of benefits and tax credits associated with disability. These are paid at different rates, have different qualifying conditions and different purposes.
- The premiums were not intended to contribute towards the extra costs experienced by disabled people – this is the role of Disability Living Allowance (DLA). The main Disability Premium was created as a simplification in 1988 to replace the previous complexity within Supplementary Benefit. Its underlying rationale was to reflect that claimants who have longer durations on benefit face higher costs. The Severe Disability Premium was introduced as a higher and additional premium for people living on their own (or treated as such) with high care needs not met by someone receiving Carers Allowance. There have been problems with its administration over the years, together with questions as to its rationale and whether it is targeted appropriately. It also overlaps in complex ways with social care. Later, the Enhanced Disability Premium was introduced to target more support on people experiencing more barriers to the labour market (using receipt of the DLA higher rate care component as a proxy). The Working Tax Credits disability elements and the predecessor benefits stemmed from concerned about work incentives.
- When Employment and Support Allowance (ESA) was introduced in 2008, the Enhanced Disability Premium continued (as is the Severe Disability Premium) and is payable automatically to top up the Support component in income-related ESA. The Severe Disability Premium is also paid in ESA. However, the creation of the work-related activity and support components lead to the abolition of the basic disability premium in ESA.
- Within Universal Credit we do not intend to replicate every aspect of this provision in the current system, which is difficult to deliver, can be prone to error and confusing for disabled people. Instead, we intend to reform the disability premiums as part of our simplification. The best way to provide additional support to severely disabled people, through Universal Credit, is to provide all those in the support group with an addition that is substantially higher than the current support component in ESA.
- Additional payments for disabled children also began with the 1988 reforms. These additions were not intended to reflect the extra costs experienced by families with disabled children, met through DLA, but the costs that were met under the system of supplementary benefits, such as costs of extra heating or baths. These entitlements were wrapped up into a simplified Disabled Child Premium paid at the same rate as the adult Disability Premium
- When the Enhanced Disability Premium was introduced in 2001 a mirroring provision was made for children. When Child Tax Credits were created in 2003 the disabled child premium and enhanced rates were converted into the disabled child element and severely disabled child element. More generous uprating over the period 2003 – 10 has seen the child payments increase at a faster pace than the adult payments, leading to a lack of alignment in rates. The Government aims to align child and adult payments through these reforms.
5. How it will work in practice
- The new additions will be simpler and fairer than the current system; they will not require the claimant to apply for multiple benefits or Tax Credits and will give over twice the cash addition for the Support Group than is currently payable under ESA. The simpler, rationalised system should also help to smooth the transition into adulthood for severely disabled young people who need to rely on Universal Credit for ongoing support.
- Having both an addition and a disregard will make work pay and encourage more people to make the move into some work, with a clearer understanding of the impact work will have on their benefit entitlement.
- For example, a single, non-householder receiving the work-related component would need to earn around £10,200 per year before their Universal Credit is eroded; a single householder would need to earn £4,300 before this started to happen.
- Transitional protection will protect the existing entitlements of people already receiving the various premiums in the current system.
6. Further work we will do
- Increases in the higher addition (support rate equivalent) will be phased in from 2013 as savings from the simplifications are realised. Details will be released at the time of the annual up-rating statements.
- The Department will undertake further work as part of the Universal Credit implementation to develop a supplement to the Work Capability Assessment to ensure it can accurately identify individuals with enduring health conditions that limit their long term ability to fully provide for themselves through work. Once developed, the Department will ensure this supplement can be reviewed as part of the ongoing annual independent reviews of the WCA, currently being undertaken by Professor Harrington.