How councils can make the most of Universal Credit data through DWP’s latest MOU

Jack Rowlands summarises some of the key changes expected in DWP’s 2025 Memorandum of Understanding (MOU) with local authorities. He argues that it is vital for local authorities to retain access to Universal Credit (UC) data, not only to ensure accurate benefit administration and meet DWP’s subsidy check requirements, but also to effectively target support to residents.

Over the past year, Jack and his team have delivered more than 1,000 updates to the LIFT platform, working with complex datasets from over one in three local authorities. This means working with complex datasets from over one in three local authorities, ensuring consistency, accuracy and impact, to deliver accurate insights and meaningful impact for councils and their residents.

Since 2016 local authorities have had access to near-live updates on the changing circumstances of low income residents in their area who are claiming Universal Credit while in receipt of Council Tax Reduction.

This data has allowed them to gain an understanding of their residents’ needs, changes of circumstances, and potential crises. In particular, crucial updates to claim details are shared in the UCDS files sent in April and May of each new financial year.

The MOU does not set out explicit limits on holding this data and instead asks local authorities to determine their own retention and storage policies. However some councils are interpreting the MOU restrictively and choosing not to retain this vital data.

This blog sets out the reasons why local authorities can and should retain their UCDS data and the uses it can serve in both improving the circumstances of residents and helping the council to uphold the accuracy and quality of its benefit claims.

Local authorities receive a full update on residents’ Universal Credit claims in April, providing insights into household status and their benefit claims. They also receive daily updates on changes in circumstances throughout the year. However, these daily updates only make sense in the context of the full data provided at the start of the financial year. Without retaining that initial information, it’s difficult to understand or act on the changes.

DWP also assesses councils annually to ensure they are providing accurate and high quality benefit assessments for Housing Benefit. This takes the form of an annual subsidy check, which is obligatory.

In order to confidently respond to DWP’s subsidy check, and to make sure they can show they are compliant with best practice, it’s key that councils retain Universal Credit data for at least the current financial year to ensure they can show the status of current claims and benefit awards.

Retaining Universal Credit data allows councils to show they have made decisions based on evidence provided to assessment officers.

DWP has indicated this data is available for councils to retain and use as they determine is relevant and useful for the purposes within the MOU. The DWP sets no expectations for councils to take a specific approach to deleting data. Clause 2.7 of the Memorandum of Understanding (MOU) states that local authorities should determine their data retention policies based on what is deemed appropriate and legal.

Retaining and using UC data is good practice, and Policy in Practice works with over 100 local authorities who use their data to support people on low incomes.

Having a sensible deletion policy is not just necessary but wise. It is right to assess whether data from prior years should be deleted, as often these residents may have moved, passed away, or become ineligible for the support initially provided. However current financial year data is integral to current schemes and interventions the council makes or may wish to make.

Sadly, some of those councils we don’t currently work with are unnecessarily dropping their Universal Credit data. This may be because of their misreading of the MOU, or a concern of recent DWP audits which emphasised good data governance, or possibly because they recently simplified their CTR scheme and believe they don’t need the data!

They really do need the data though!

Retaining Universal Credit data can help councils to assess the support available to residents.

Councils use Universal Credit data to improve their Council Tax support schemes. We help council use their UC data to model CTR schemes so that they reflect changing national policies and the profile of poverty in their area. You can read more about our findings on recent CTR trends here.

Universal Credit data can also help councils to identify households that are:

• struggling financially
• impacted by national welfare reforms
• at risk of homelessness
• in debt or multiple debts with the council so they can target income maximisation, AOBs and write offs to reduce debt owed
• need employment support so they can access services and financial support
• not claiming £23 billion in support and benefits

It can identify cohorts of residents with common characteristics who may be particularly vulnerable, for example single parents, or people set to be impacted by upcoming changes to disability benefits.

The council can use this data, but only if they retain key claim details over the current financial year.

Retaining Universal Credit data may seem like an obvious decision for local authorities. It means that we can help them to more accurately model changes to their CTR scheme, or to help target support to their residents.

Unfortunately, some councils err-overly on the side of caution, leading them to reduce data retention periods. This excessive caution has serious consequences.

Key obligations such as the DWP subsidy check show that retaining data is not just helpful but essential to carrying out key functions. Clearer data on residents and their circumstances helps councils when assessing support measures, such as Council Tax reduction schemes or the household support fund.

Without this information covering the financial year, it will become harder for councils to test their existing measures and find new more efficient ways to tackle poverty and hardship faced by their residents.

Each of our 100+ local authority partners show that compliance with the DWP MOU is possible, following good data security and reasonable retention policies. Retaining Universal Credit data within these rules enables vital analysis of data to support residents, demonstrate value for money, and comply with checks and oversight from central government each year.

If you are a local authority you can learn more about Universal Credit data and how to use it while following best governance practice at our invitation-only UC data roundtable. Request to join here.