Below are a number of frequently asked questions about Universal Credit. These are collated based on feedback on the calculator and other posts on the blog. If you have questions, or see something that is missing or unclear in the blog below, please post your comments at the bottom of this page.
If you are looking for the answer to a question, use ctrl+f to see if it has already been answered.
Q. What is Universal Credit?
Universal Credit is a new, means-tested benefit for people of working age on a low income. It will replace six main benefits/tax credits: Income Support, Income-based Jobseeker’s Allowance, Income-related Employment and Support Allowance, Child Tax Credit, Working Tax Credit, and Housing Benefit, combining all of these benefits into one single household payment.
Q. Why is Universal Credit being introduced?
Universal Credit is being introduced to address some problems with the current benefit system, namely making things simpler for claimants by rolling multiple benefits into one single application and one single payment. The DWP states that Universal Credit aims to make work pay, make it easier for people to move in and out of work, make the system easier to understand, reduce poverty, reduce fraud and error, and save taxpayer money.
Q. When will Universal Credit go into effect?
April 2013: The ‘pathfinder’ pilot launched in Ashton-under-Lyne for new, simple claims.
July 2013: Three further ‘pathfinders’ in the Greater Manchester area (Wigan, Warrington, Oldham) launched for new, simple claims.
Autumn 2013: Six further ‘pathfinders’ around the country (Hammersmith, Rugby, Inverness, Harrogate, Bath, Shotton) launch for new, simple claims.
Spring 2014: Pathfinders will begin to take on couple claims.
Autumn 2014: Pathfinders will begin to take on claims for households with children.
2016-2017: The majority of existing benefit claims will be migrated to Universal Credit.
Post-2017: Employment and Support Allowance (ESA) claims will be migrated to Universal Credit.
Q. How do I claim Universal Credit?
Policy in Practice can help you estimate your Universal Credit entitlement, but we cannot help you claim Universal Credit.
Universal Credit is being slowly rolled out and is only available in 10 areas at the moment:
If you live in one of the areas above, you may be able to claim Universal Credit. You can apply online here, call the Universal Credit helpline (Telephone: 0845 600 0723 or Textphone: 0845 600 0743), or visit your local Jobcentre.
Q. How will Universal Credit be paid?
For the majority of people, Universal Credit will be paid in one monthly payment to the bank account of a designated person for the whole household. Universal Credit will be paid in arrears which means that a successful claimant will receive their first Universal Credit payment 1 month and 7 days after they’ve made their claim.
Monthly payments are intended to encourage budgeting skills and reflect the ‘world of work’ where 75% of employees receive their wages monthly, making the transition into monthly paid work easier. In exceptional circumstances, people will be able to receive payments more frequently. An advisor will determine whether or not to change a claimant’s frequency of payments, and their decision will be partly discretionary and partly based on a set of questions designed to determine the claimant’s level of vulnerability.
There will also be exceptions for the housing element of Universal Credit. For people in ‘exempt accommodation’ (e.g. hostels, supported housing), the housing element will continue to be administered locally and paid directly to the landlord in the short-term. For people in non-exempt accommodation, there is also a provision that will allow the housing element to be paid directly to the landlord after the household reaches a certain debt threshold.
For people without bank accounts, Universal Credit may be paid via a Post Office Card Account (POCA) or the new ‘Simple Payment’ system which is already being used for some benefits claimants.
Q. What will happen when I move into work?
Universal Credit is designed to make the transition into work easier and for people to make sure that people are better off in work than they are on benefits. To find out how your Universal Credit entitlement would be affected by moving into work, try our free Universal Credit calculator.
Q. I appear to be worse off under Universal Credit!
Universal Credit is unlikely to impact you until after April 2014 if you are a current benefit or tax credit claimant, and your circumstances may change in the meantime. However, other welfare changes separate to Universal Credit are happening in April 2013, (e.g. under-occupation, benefit cap, council tax changes) through which some people are set to lose out. The premium version of the Universal Credit calculator takes all of these other welfare changes into account.
Transitional protection aims to ensure that people are no worse off when Universal Credit is introduced: ‘If the amount of Universal Credit a person is entitled to is less than the amount they were getting under the old system, an additional amount will be paid to ensure that they will be no worse off in cash terms’ – DWP.
Q. I am in work, but earn less than 35 hours a week at the national minimum wage – will my eligibility for Universal Credit be affected if I don’t seek more hours?
The new system is designed to reward work, and you should not be punished for being in work under Universal Credit. Nevertheless, the in work conditionality regime means that households earning below a certain threshold will be asked if they can take reasonable steps to increase their earnings. For claimants without any caring responsibilities, fully able to seek work, this will mean earnings of at least 35 hours x the national minimum wage, or £216.65 per week.
Examples of how claimants may increase their earnings include:
- Increasing their hours or their hourly wage with their current employer
- Finding one or more additional jobs that they can do alongside their current job
- Finding a new job with a higher income.
It is expected that there will be a degree of advisor discretion applied, and claimants will be able to choose an approach that works best for them. It is unlikely that the government will require anyone to leave a job in order to take up a higher paying one elsewhere as the individual is best placed to judge which job on balance (transport, childcare) is best for them. For more information, see this blog post on Universal Credit conditionality.
There is a consultation by the DWP asking for ideas on how people earning below these thresholds can be encouraged and supported to increase their earnings, if you have any ideas please contact us.
Q. Under Universal Credit, who will be entitled to mortgage support?
Home-owners / owner occupiers will only be entitled to mortgage support under Universal Credit if they are out of work (zero-earnings). There will also be a waiting period (TBD) before they can claim mortgage support. There will be a two-year limit to mortgage support under Universal Credit that will apply to households that are able to work. The government rationale behind the mortgage support regulations is that owner-occupiers should find work as soon as possible to meet their mortgage obligations.
Q. Is child maintenance taken into account for Universal Credit purposes?
Child maintenance payments will be treated as non-means tested income under Universal Credit and will not affect your Universal Credit eligibility.
Spousal maintenance payments will be treated as unearned income (Universal Credit equivalent) and lead to a pound for pound reduction in Universal Credit support.
Updated 12 December 2013